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Oracle® Process Manufacturing
Cost Management User's Guide

Release 12.2
Part No. E49061-02
November 2013
Oracle Process Manufacturing Cost Management User's Guide, Release 12.2
Part No. E49061-02
Copyright © 1998, 2013, Oracle and/or its affiliates. All rights reserved.
Primary Author: Ankit Jaiswal
Contributing Author: Reena Titus
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Contents
Send Us Your Comments
Preface
1 Overview
OPM Cost Development Area...................................................................................................1-1
Cost Management Process Flow................................................................................................1-2
Defining Costs........................................................................................................................... 1-3
Establishing Standard Costing................................................................................................. 1-5
Establishing Actual Costing...................................................................................................... 1-6
Establishing Lot Costing........................................................................................................... 1-6
Retroactive Pricing.................................................................................................................... 1-7
Valuing Inventory and Resource Transactions........................................................................ 1-8
Monitoring and Simulating Costs............................................................................................ 1-9
2 Setting Up
Setting Up in Other Applications............................................................................................. 2-2
Setting Profile Options............................................................................................................. 2-4
Understanding Cost Types...................................................................................................... 2-24
Standard Costing............................................................................................................... 2-24
Actual Costing................................................................................................................... 2-25
Lot Cost Type.............................................................................................................. 2-29
Defining Cost Types............................................................................................................... 2-29
Defining Cost Calendars......................................................................................................... 2-31
Assigning Calendar to Legal Entity........................................................................................ 2-32
Setting the Period Status......................................................................................................... 2-33
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Defining Component Groups................................................................................................. 2-34
Defining Cost Component Classes......................................................................................... 2-34
Defining Cost Analysis Codes................................................................................................ 2-37
Defining Costing Organization Associations.........................................................................2-38
Defining Fiscal Policies........................................................................................................... 2-39
Defining Event Fiscal Policies................................................................................................ 2-40
Assigning Ledgers................................................................................................................... 2-41
Defining Percentage Overhead Codes ................................................................................... 2-42
Defining Overhead Priorities .................................................................................................2-43
Defining Overhead Percentage............................................................................................... 2-44
Defining Source and Target Variable Overhead Components Associations........................ 2-45
Defining Cost Factors ............................................................................................................. 2-46
Defining Resource Costs......................................................................................................... 2-47
Defining Fixed Overheads...................................................................................................... 2-50
3 Using Standard Costing

Requirements............................................................................................................................ 3-2
Understanding Standard Cost................................................................................................... 3-5
Factors Affecting Standard Costs.............................................................................................. 3-5
Defining Standard Item Costs................................................................................................ 3-10
Defining Recipe, Routings, and Formulas..............................................................................3-13
Defining Resources and Resource Costs................................................................................ 3-13
Defining Rollup Source Organizations.................................................................................. 3-13
Running Standard Cost Rollup............................................................................................... 3-15
Cost Rollup Error Messages.................................................................................................... 3-18
Viewing Standard Costs.......................................................................................................... 3-18
Viewing Overhead Details...................................................................................................... 3-18
Viewing Routing Costs........................................................................................................... 3-19
Viewing Formula Costs........................................................................................................... 3-20
Viewing Item Costs................................................................................................................. 3-21
Item Cost List Window............................................................................................................ 3-22
4 Using Actual Costing

Requirements............................................................................................................................ 4-2
Understanding Actual Costing................................................................................................. 4-3
Actual Cost Calculation Methods............................................................................................. 4-3
Describing Transactions in Actual Costs.................................................................................. 4-5
Transactions Impacting Raw Material Costs........................................................................ 4-6
Transactions Impacting Product Costs.............................................................................. 4-12
Calculating PMAC Cost with Circular References.................................................................4-21
iv
Setting Up Expense Allocations.............................................................................................. 4-22
Defining Allocation Codes..................................................................................................... 4-22
Defining Allocation Basis....................................................................................................... 4-22
Defining Expenses to Allocate................................................................................................ 4-24
Using Material Cost Component Classes............................................................................... 4-25
Defining Adjustment Reason Codes...................................................................................... 4-26
Processing Cost Allocations.................................................................................................... 4-27
Running the Actual Cost Process............................................................................................ 4-28
Viewing the Actual Cost Process............................................................................................ 4-30
Viewing Actual Cost Error Messages..................................................................................... 4-31
Aborting or Resetting the Actual Cost Process....................................................................... 4-31
Viewing Actual Cost Transactions..........................................................................................4-31
Viewing Item Cost List............................................................................................................ 4-34
Item Cost List Window............................................................................................................ 4-36
Viewing Overhead Details...................................................................................................... 4-36
Viewing Routing Costs........................................................................................................... 4-37
Using Actual Cost Adjustments.............................................................................................. 4-38
Zero Activity/Quantity Adjustments in Actual Costing........................................................ 4-40
5 Using Lot Costing

Requirements............................................................................................................................ 5-1
Understanding Lot Costing....................................................................................................... 5-4
Transactions Affecting Lot Cost................................................................................................5-4
Setting Up Lot Cost Items......................................................................................................... 5-5
Defining Lot Cost Overheads................................................................................................... 5-6
Running the Lot Cost Process................................................................................................... 5-7
Viewing the Lot Cost Details.................................................................................................... 5-8
Using Lot Cost Adjustments................................................................................................... 5-10
Lot Costing Examples.............................................................................................................. 5-11
6 OPM - Landed Cost Management Integration

Understanding OPM - Landed Cost Management Integration................................................6-1
Using LCM as a Pre-Receiving Application .......................................................................... 6-11
Using LCM as a Service........................................................................................................... 6-12
Running the Landed Cost Adjustments Import Process........................................................ 6-13
7 Copying Costs
Copying Item Costs................................................................................................................... 7-1
Copying Costs Examples........................................................................................................... 7-4
Copying Resource Costs............................................................................................................ 7-5
v
Copying Fixed Overheads......................................................................................................... 7-7
Copying Overhead Percentage.................................................................................................. 7-9
Copy Source Organizations.................................................................................................... 7-10
8 Period-End Cost Processing

Running Cost Update................................................................................................................ 8-1
Viewing Cost Update Results................................................................................................... 8-3
Viewing Cost Update Errors..................................................................................................... 8-4
Aborting or Resetting the Cost Update Process....................................................................... 8-5
Adding or Modifying Expense Allocation Costing Data......................................................... 8-5
Standard Cost Period-End Processing...................................................................................... 8-6
Run Cost Rollup................................................................................................................... 8-7
Run Preliminary Update...................................................................................................... 8-7
Close Inventory Calendar Period......................................................................................... 8-8
Run Final Cost Update......................................................................................................... 8-8
Actual Cost Period-End Processing...........................................................................................8-8
Close Inventory Calendar Period......................................................................................... 8-9
Calculate Actual Costs......................................................................................................... 8-9
Run Preliminary Update.................................................................................................... 8-10
Run Final Cost Update....................................................................................................... 8-10
Lot Cost Period-End Processing ............................................................................................. 8-10
Lot Cost Period-End Processing Flow................................................................................ 8-11
9 Cost Management Reports

Item Cost Detail Report............................................................................................................. 9-1
Costed Indented Bill of Materials Report.................................................................................9-2
Actual Cost Adjustments.......................................................................................................... 9-4
GL Expense Allocation Definition ........................................................................................... 9-4
GL Expense Allocation Detail Report....................................................................................... 9-5
Cost Organization Association Report..................................................................................... 9-5
GL Item Cost Detail Report.......................................................................................................9-6
Inventory Valuation Report...................................................................................................... 9-7
Batch Yield Variance Report..................................................................................................... 9-8
Material Usage and Substitution Variance Report...................................................................9-8
OPM Lot Cost Detail Report..................................................................................................... 9-8
OPM Lot Cost History Report................................................................................................... 9-9
Running the Detailed Subledger Report................................................................................ 9-10
Running the Accounting Unit Mapping Report.....................................................................9-12
Running the Account Mapping Report.................................................................................. 9-13
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10 Accounting Setup
Subledger Accounting............................................................................................................. 10-1
Application Accounting Definition Hierarchy.......................................................................10-2
Multiple Subledger Accounting Valuation for a Transaction............................................... 10-2
OPM Costing - SLA Accounting Data.................................................................................... 10-3
11 Accounting Processes and Distributions

Running the OPM Accounting Preprocessor..........................................................................11-1
Viewing the Accounting Preprocessor Results.......................................................................11-3
SLA Accounting Processes...................................................................................................... 11-5
Viewing Accounting Events Journal Entries.......................................................................... 11-5
Subledger Account Distribution............................................................................................. 11-6
Business Rules for Distributions............................................................................................ 11-6
Oracle Inventory Distributions............................................................................................... 11-8
OPM Costing Distribution.................................................................................................... 11-24
Production Distribution........................................................................................................ 11-26
Oracle Order Management Distribution for Process Organization.....................................11-56
Oracle Purchasing Distribution for Process Organization...................................................11-68
Enhanced Drop Shipments and Global Procurement.......................................................... 11-71
A Navigator Paths
Oracle Process Manufacturing Cost Management Navigator Paths........................................A-1
Glossary
Index
vii

Send Us Your Comments
Oracle Process Manufacturing Cost Management User's Guide, Release 12.2

Part No. E49061-02
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ix

Preface
Intended Audience
Welcome to Release 12.2 of the Oracle Process Manufacturing Cost Management User's
Guide.
This guide assumes that you have working knowledge of your business area's
processes, tools, principles, and customary practices. It also assumes that you are
familiar with Oracle Process Manufacturing. If you have never used Oracle Process
Manufacturing, we suggest you attend one or more of the Oracle Process
Manufacturing training classes available through Oracle University.
See Related Information Sources on page xiii for more Oracle E-Business Suite product
information.
Documentation Accessibility
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Structure
1 Overview
This topic provides an overview of Oracle Process Manufacturing (OPM) Cost
Management.
2 Setting Up
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This topic includes procedures and values that you must define before using the
application. These basic setups are required regardless of whether you want to use the
standard, actual, or lot cost methods. This topic includes setting up in other
applications, profile options, and setting the cost calendar and costing periods, cost
analysis codes, cost type codes, and cost component classes.
A detailed description on setting up and calculating standard, actual, and lot costs are
provided in their topic discussions.
3 Using Standard Costing
This topic describes how to define and use standard costs for production items. These
costs include raw materials, overheads, and other costs associated with production.
Once defined, you can propagate those costs for use by other organizations within your
legal entity and determine the appropriate costs to use for accounting.
Individual ingredient and resource costs must be rolled-up to reflect the total standard
cost of the item that is produced. This procedure is detailed in the Standard Cost Rollup
discussion.
4 Using Actual Costing
This topic describes how to setup and use actual cost.
5 Using Lot Costing
This topic describes how to set up and use lot costing.
6 OPM - Landed Cost Management Integration
7 Copying Costs
This topic describes copying item, overhead, and resource costs set up for one
organization, calendar and period, and category to another period and inventory
organization or to all periods and inventory organizations. You can use the copy
processes to quickly replicate the cost data setup across several periods and several
organizations rather than creating them one at a time in each periods and organizations
that can be very time consuming. The copy programs let you copy the costs for a set of
items or set of items belonging to a range of Item Categories or automatically modify
the copied costs by a percentage or flat value providing additional flexibility in
establishing your costs.
8 Period-End Cost Processing
This topic explain how to update (book) item component costs in preparation for export
to the proper general ledger accounts. The actual export to the general ledger requires
an interface with Oracle General Ledger. This topic provides an outline for period-end
processing of standard component costs and actual component costs.
9 Cost Management Reports
This topic describes the available costing reports. Reports are available through the
Application's Standard Report Submission window.
10 Accounting Setup
The following chapter describes the accounting setup done in Oracle Subledger
Architecture.
11 Accounting Processes and Distributions
This chapter describes the subledger account distribution.
xii
A Navigator Paths
This topic provides the default navigation path for Accounting Setup and the cost
management profile options.
Glossary
Related Information Sources

Online Documentation
All Oracle E-Business Suite documentation is available online (HTML or PDF).
• Online Help - Online help patches (HTML) are available on My Oracle Support.
• PDF Documentation - See the Oracle E-Business Suite Documentation Library for
current PDF documentation for your product with each release.
• Release Notes - For information about changes in this release, including new
features, known issues, and other details, see the release notes for the relevant
product, available on My Oracle Support.
• Oracle Electronic Technical Reference Manual - The Oracle Electronic Technical

Reference Manual (eTRM) contains database diagrams and a detailed description of
database tables, forms, reports, and programs for each Oracle E-Business Suite
product. This information helps you convert data from your existing applications
and integrate Oracle E-Business Suite data with non-Oracle applications, and write
custom reports for Oracle E-Business Suite products. The Oracle eTRM is available
on My Oracle Support.
Related Guides
Guides Related to This Product
Oracle Process Manufacturing Cost Management User's Guide
The Oracle Process Manufacturing Cost Management application is used by cost
accountants to capture and review the manufacturing costs incurred in their process
manufacturing businesses. The guide describes how to set up and use this application.
Oracle Process Manufacturing Process Execution User's Guide
The Oracle Process Manufacturing Process Execution application lets you track firm
planned orders and production batches from incoming materials through finished
goods. Seamlessly integrated to the Product Development application, Process
Execution lets you convert firm planned orders to single or multiple production
batches, allocate ingredients, record actual ingredient usage, and then complete and
close production batches. Production inquiries and preformatted reports help you
optimize inventory costs while maintaining a high level of customer satisfaction with
on-time delivery of high quality products. The Oracle Process Manufacturing Process
Execution User's Guide presents overviews of the tasks and responsibilities for the
Production Supervisor and the Production Operator. It provides prerequisite setup in
xiii
other applications, and details the windows, features, and functionality of the
application.
Oracle Process Manufacturing Product Development User's Guide
The Oracle Process Manufacturing Product Development application provides features
to manage formula, routing, recipe, and validity rule development within process
manufacturing operations. Use it to manage multiple laboratory organizations and
support varying product lines throughout the enterprise. Characterize and simulate the
technical properties of ingredients and their effects on formula performance and cost.
Simulate and optimize formulations before beginning expensive laboratory test batches.
Product Development coordinates each development function to provide a rapid,
enterprise-wide implementation of new products in your plants. The guide describes
how to set up and use this application.
Oracle Process Manufacturing Quality Management User's Guide
The Oracle Process Manufacturing Quality Management application provides features
to test material sampled from inventory, production, or receipts from external
suppliers. The application lets you enter specifications and control their use throughout
the enterprise. Customized workflows and electronic recordkeeping automate plans for
sampling, testing, and result processing. Compare specifications to assist in regrading
items, and match customer specifications. Aggregate test results and print statistical
assessments on quality certificates. Run stability testing with unrivaled ease. Several
preformatted reports and inquiries help manage quality testing and reporting. The
guide describes how to set up and use this application.
System Administration User's Guide
Much of the System Administration duties are performed at the Oracle Applications
level, and are therefore described in the Oracle E-Business Suite Guides. The Oracle Process
Manufacturing System Administration User's Guide provides information on the few tasks
that are specific to Oracle Process Manufacturing. It offers information on performing
Oracle Process Manufacturing file purge and archive, and maintaining such things as
responsibilities, units of measure, and organizations.
Regulatory Management User's Guide
Oracle Process Manufacturing Regulatory Management provides solutions for
document management that help meet the FDA 21 CFR Part 11 and other international
regulatory compliance requirements. Regulatory information management is facilitated
by use of electronic signatures. Manage hazard communications by collaborating with
Oracle partners to dispatch safety documents, attached printed documentation sets such
as the MSDS to shipments, and set up workflows to manage documentation revisions,
approvals, and transmittals. The Oracle Process Manufacturing Regulatory Management
User's Guide provides the information to set up and use the application.
Oracle Manufacturing Execution System for Process Manufacturing
Oracle Manufacturing Execution System (MES) for Process Manufacturing provides a
seamless integration to product development and process execution applications for
rapid deployment and tracking of procedures, work instruction tasks, and batch
xiv
records. Set up and manage material dispensing operations and produce electronic
batch records interactively with full electronic signature control, nonconformance
management, and label printing routines. The Oracle Manufacturing Execution System for
Process Manufacturing User's Guide delivers the information to set up and use the
application.
API User's Guides
Public Application Programming Interfaces (APIs) are available for use with different
Oracle Process Manufacturing applications. APIs pass information into and out of the
application tables, thereby bypassing the user interface. Use of these APIs is
documented in separately available documentation.
Oracle Engineering User's Guide
This guide enables your engineers to utilize the features of Oracle Engineering to
quickly introduce and manage new designs into production. Specifically, this guide
details how to quickly and accurately define the resources, materials and processes
necessary to implement changes in product design.
Oracle Inventory User's Guide
This guide describes how to define items and item information, perform receiving and
inventory transactions, maintain cost control, plan items, perform cycle counting and
physical inventories, and set up Oracle Inventory.
Oracle Bills of Material User's Guide
This guide describes how to create various bills of material to maximize efficiency,
improve quality and lower cost for the most sophisticated manufacturing
environments. By detailing integrated product structures and processes, flexible
product and process definition, and configuration management, this guide enables you
to manage product details within and across multiple manufacturing sites.
Oracle Work in Process User's Guide
This guide describes how Oracle Work in Process provides a complete production
management system. Specifically this guide describes how discrete, repetitive, assemble
–to–order, project, flow, and mixed manufacturing environments are supported.
Oracle Quality User's Guide
This guide describes how Oracle Quality can be used to meet your quality data
collection and analysis needs. This guide also explains how Oracle Quality interfaces
with other Oracle Manufacturing applications to provide a closed loop quality control
system.
Oracle Shipping Execution User's Guide
This guide describes how to set up Oracle Shipping to process and plan your trips,
stops and deliveries, ship confirmation, query shipments, determine freight cost and
charges to meet your business needs.
Oracle Purchasing User's Guide
xv
This guide describes how to create and approve purchasing documents, including
requisitions, different types of purchase orders, quotations, RFQs, and receipts. This
guide also describes how to manage your supply base through agreements, sourcing
rules and approved supplier lists. In addition, this guide explains how you can
automatically create purchasing documents based on business rules through integration
with Oracle Workflow technology, which automates many of the key procurement
processes.
Oracle interMedia User's Guide and Reference
This user guide and reference provides information about Oracle interMedia. This
product enables Oracle9i to store, manage, and retrieve geographic location
information, images, audio, video, or other heterogeneous media data in an integrated
fashion with other enterprise information. Oracle Trading Community Architecture
Data Quality Management uses interMedia indexes to facilitate search and matching.
Oracle Self–Service Web Applications Implementation Guide
This manual contains detailed information about the overview and architecture and
setup of Oracle Self–Service Web Applications. It also contains an overview of and
procedures for using the Web Applications Dictionary.
Installation and System Administration
Oracle Alert User's Guide
This guide explains how to define periodic and event alerts to monitor the status of
your Oracle E-Business Suite data.
Oracle Application Framework Developer's Guide
This guide contains the coding standards followed by the Oracle E-Business Suite
development staff to produce applications built with Oracle Application Framework.
This guide is available in PDF format on My Oracle Support and as online
documentation in JDeveloper 10g with Oracle Application Extension.
Oracle Application Framework Personalization Guide
This guide covers the design-time and run-time aspects of personalizing applications
built with Oracle Application Framework.
Oracle Diagnostics Framework User's Guide
This manual contains information on implementing and administering diagnostics tests
for Oracle E-Business Suite using the Oracle Diagnostics Framework.
Oracle E-Business Suite Concepts
This book is intended for all those planning to deploy Oracle E-Business Suite Release
12.2, or contemplating significant changes to a configuration. After describing the
Oracle E-Business Suite architecture and technology stack, it focuses on strategic topics,
giving a broad outline of the actions needed to achieve a particular goal, plus the
installation and configuration choices that may be available.
Oracle E-Business Suite CRM System Administrator's Guide
xvi
This manual describes how to implement the CRM Technology Foundation (JTT) and
use its System Administrator Console.
Oracle E-Business Suite Desktop Integration Framework Developer's Guide
Oracle E-Business Suite Desktop Integration Framework is a development tool that lets
you define custom integrators for use with Oracle Web Applications Desktop
Integrator. This guide describes how to define and manage integrators and all
associated supporting objects, as well as how to download and upload integrator
definitions.
Oracle E-Business Suite Developer's Guide
This guide contains the coding standards followed by the Oracle E-Business Suite
development staff. It describes the Oracle Application Object Library components
needed to implement the Oracle E-Business Suite user interface described in the Oracle
E-Business Suite User Interface Standards for Forms-Based Products. It provides information
to help you build your custom Oracle Forms Developer forms so that they integrate
with Oracle E-Business Suite. In addition, this guide has information for customizations
in features such as concurrent programs, flexfields, messages, and logging.
Oracle E-Business Suite Flexfields Guide
This guide provides flexfields planning, setup, and reference information for the Oracle
E-Business Suite implementation team, as well as for users responsible for the ongoing
maintenance of Oracle E-Business Suite product data. This guide also provides
information on creating custom reports on flexfields data.
Oracle E-Business Suite Installation Guide: Using Rapid Install
This book is intended for use by anyone who is responsible for installing or upgrading
Oracle E-Business Suite. It provides instructions for running Rapid Install either to carry
out a fresh installation of Oracle E-Business Suite Release 12.2, or as part of an upgrade
to Release 12.2.
Oracle E-Business Suite Maintenance Guide
This guide contains information about the strategies, tasks, and troubleshooting
activities that can be used to help ensure an Oracle E-Business Suite system keeps
running smoothly, together with a comprehensive description of the relevant tools and
utilities. It also describes how to patch a system, with recommendations for optimizing
typical patching operations and reducing downtime.
Oracle E-Business Suite Security Guide
This guide contains information on a comprehensive range of security-related topics,
including access control, user management, function security, data security, and
auditing. It also describes how Oracle E-Business Suite can be integrated into a single
sign-on environment.
Oracle E-Business Suite Setup Guide
This guide contains information on system configuration tasks that are carried out
either after installation or whenever there is a significant change to the system. The
xvii
activities described include defining concurrent programs and managers, enabling
Oracle Applications Manager features, and setting up printers and online help.
Oracle E-Business Suite User's Guide
This guide explains how to navigate, enter data, query, and run reports using the user
interface (UI) of Oracle E-Business Suite. This guide also includes information on setting
user profiles, as well as running and reviewing concurrent requests.
Oracle E-Business Suite User Interface Standards for Forms-Based Products
This guide contains the user interface (UI) standards followed by the Oracle E-Business
Suite development staff. It describes the UI for the Oracle E-Business Suite products and
how to apply this UI to the design of an application built by using Oracle Forms.
Oracle E-Business Suite Integrated SOA Gateway User's Guide
This guide describes the high level service enablement process, explaining how users
can browse and view the integration interface definitions and services residing in
Oracle Integration Repository.
Oracle E-Business Suite Integrated SOA Gateway Implementation Guide
This guide explains how integration repository administrators can manage and
administer the Web service activities for integration interfaces including native
packaged integration interfaces, composite services (BPEL type), and custom
integration interfaces. It also describes how to invoke Web services from Oracle
E-Business Suite by employing the Oracle Workflow Business Event System, and how
to manage Web service security, configure logs, and monitor SOAP messages.
Oracle E-Business Suite Integrated SOA Gateway Developer's Guide
This guide describes how system integration developers can perform end-to-end service
integration activities. These include orchestrating discrete Web services into meaningful
end-to-end business processes using business process execution language (BPEL), and
deploying BPEL processes at run time.
This guide also explains how to invoke Web services using the Service Invocation
Framework. This includes defining Web service invocation metadata, invoking Web
services, and testing the Web service invocation.
Oracle e-Commerce Gateway User's Guide
This guide describes the functionality of Oracle e-Commerce Gateway and the
necessary setup steps in order for Oracle E-Business Suite to conduct business with
trading partners through Electronic Data Interchange (EDI). It also describes how to run
extract programs for outbound transactions, import programs for inbound transactions,
and the relevant reports.
Oracle e-Commerce Gateway Implementation Guide
This guide describes implementation details, highlighting additional setup steps needed
for trading partners, code conversion, and Oracle E-Business Suite. It also provides
architecture guidelines for transaction interface files, troubleshooting information, and a
description of how to customize EDI transactions.
xviii
Oracle iSetup Developer's Guide
This manual describes how to build, test, and deploy Oracle iSetup Framework
interfaces.
Oracle iSetup User's Guide
This guide describes how to use Oracle iSetup to migrate data between different
instances of the Oracle E-Business Suite and generate reports. It also includes
configuration information, instance mapping, and seeded templates used for data
migration.
Oracle Report Manager User's Guide
Oracle Report Manager is an online report distribution system that provides a secure
and centralized location to produce and manage point-in-time reports. Oracle Report
Manager users can be either report producers or report consumers. Use this guide for
information on setting up and using Oracle Report Manager.
Oracle Web Applications Desktop Integrator Implementation and Administration
Guide
Oracle Web Applications Desktop Integrator brings Oracle E-Business Suite
functionality to a spreadsheet, where familiar data entry and modeling techniques can
be used to complete Oracle E-Business Suite tasks. You can create formatted
spreadsheets on your desktop that allow you to download, view, edit, and create Oracle
E-Business Suite data, which you can then upload. This guide describes how to
implement Oracle Web Applications Desktop Integrator and how to define mappings,
layouts, style sheets, and other setup options.
Oracle Workflow Administrator's Guide
This guide explains how to complete the setup steps necessary for any product that
includes workflow-enabled processes. It also describes how to manage workflow
processes and business events using Oracle Applications Manager, how to monitor the
progress of runtime workflow processes, and how to administer notifications sent to
workflow users.
Oracle Workflow Developer's Guide
This guide explains how to define new workflow business processes and customize
existing Oracle E-Business Suite-embedded workflow processes. It also describes how
to define and customize business events and event subscriptions.
Oracle Workflow User's Guide
This guide describes how users can view and respond to workflow notifications and
monitor the progress of their workflow processes.
Oracle Workflow API Reference
This guide describes the APIs provided for developers and administrators to access
Oracle Workflow.
Oracle Workflow Client Installation Guide
xix
This guide describes how to install the Oracle Workflow Builder and Oracle XML
Gateway Message Designer client components for Oracle E-Business Suite.
Oracle XML Gateway User's Guide
This guide describes Oracle XML Gateway functionality and each component of the
Oracle XML Gateway architecture, including Message Designer, Oracle XML Gateway
Setup, Execution Engine, Message Queues, and Oracle Transport Agent. It also explains
how to use Collaboration History that records all business transactions and messages
exchanged with trading partners.
The integrations with Oracle Workflow Business Event System, and the
Business-to-Business transactions are also addressed in this guide.
Oracle XML Publisher Report Designer's Guide
Oracle XML Publisher is a template-based reporting solution that merges XML data
with templates in RTF or PDF format to produce a variety of outputs to meet a variety
of business needs. Using Microsoft Word or Adobe Acrobat as the design tool, you can
create pixel-perfect reports from the Oracle E-Business Suite. Use this guide to design
your report layouts.
This guide is available through the Oracle E-Business Suite online help.
Oracle XML Publisher Administration and Developer's Guide
Oracle XML Publisher is a template-based reporting solution that merges XML data
with templates in RTF or PDF format to produce a variety of outputs to meet a variety
of business needs. Outputs include: PDF, HTML, Excel, RTF, and eText (for EDI and
EFT transactions). Oracle XML Publisher can be used to generate reports based on
existing Oracle E-Business Suite report data, or you can use Oracle XML Publisher's
data extraction engine to build your own queries. Oracle XML Publisher also provides a
robust set of APIs to manage delivery of your reports via e-mail, fax, secure FTP,
printer, WebDav, and more. This guide describes how to set up and administer Oracle
XML Publisher as well as how to use the Application Programming Interface to build
custom solutions.
This guide is available through the Oracle E-Business Suite online help.
Oracle E-Business Suite Upgrade Guide, Release 11i to 12.2
Refer to this guide if you are upgrading your Oracle E-Business Suite Release 11
products to Release 12. This guide describes the upgrade process and lists database and
product-specific upgrade tasks.
Oracle E-Business Suite Upgrade Guide, Release 12.0 and 12.1 to 12.2
Refer to this guide if you are upgrading your Oracle E-Business Suite Release 12.0 and
12.1 products to Release 12.2. This guide describes the upgrade process and lists
database and product-specific upgrade tasks.
xx
Integration Repository
The Oracle Integration Repository is a compilation of information about the service
endpoints exposed by the Oracle E-Business Suite of applications. It provides a
complete catalog of Oracle E-Business Suite's business service interfaces. The tool lets
users easily discover and deploy the appropriate business service interface for
integration with any system, application, or business partner.
The Oracle Integration Repository is shipped as part of the E-Business Suite. As your
instance is patched, the repository is automatically updated with content appropriate
for the precise revisions of interfaces in your environment.
You can navigate to the Oracle Integration Repository through Oracle E-Business Suite
Integrated SOA Gateway.
Do Not Use Database Tools to Modify Oracle E-Business Suite Data

Oracle STRONGLY RECOMMENDS that you never use SQL*Plus, Oracle Data
Browser, database triggers, or any other tool to modify Oracle E-Business Suite data
unless otherwise instructed.
Oracle provides powerful tools you can use to create, store, change, retrieve, and
maintain information in an Oracle database. But if you use Oracle tools such as
SQL*Plus to modify Oracle E-Business Suite data, you risk destroying the integrity of
your data and you lose the ability to audit changes to your data.
Because Oracle E-Business Suite tables are interrelated, any change you make using an
Oracle E-Business Suite form can update many tables at once. But when you modify
Oracle E-Business Suite data using anything other than Oracle E-Business Suite, you
may change a row in one table without making corresponding changes in related tables.
If your tables get out of synchronization with each other, you risk retrieving erroneous
information and you risk unpredictable results throughout Oracle E-Business Suite.
When you use Oracle E-Business Suite to modify your data, Oracle E-Business Suite
automatically checks that your changes are valid. Oracle E-Business Suite also keeps
track of who changes information. If you enter information into database tables using
database tools, you may store invalid information. You also lose the ability to track who
has changed your information because SQL*Plus and other database tools do not keep a
record of changes.
xxi
1
Overview
This topic provides an overview of Oracle Process Manufacturing (OPM) Cost

Management.
This chapter covers the following topics:
• OPM Cost Development Area
• Cost Management Process Flow
• Defining Costs
• Establishing Standard Costing
• Establishing Actual Costing
• Establishing Lot Costing
• Retroactive Pricing
• Valuing Inventory and Resource Transactions
• Monitoring and Simulating Costs
OPM Cost Development Area

All material and resource transactions in a "process enabled" Inventory Organization
are costed using OPM Costing. The primary functions of OPM Costing are:
• Develop and Maintain costs using the following cost methods:
• Standard Costs
• Actual Costs
• Lot Costs
• Valuing material and resource transactions in
Overview 1-1
• Production
• Shipping
• Inventory
• Purchasing
• Inventory Valuation
• Create journals in OPM Subledger using Oracle Subledger Accounting
• Monitor and simulate costs using reports and inquiries
Note: Item and inventory transaction information are maintained in

Oracle Inventory.
Cost Management Process Flow

The Cost Management Process flow is as follows:
• Complete the basic setup
• Use standard, actual, or lot cost calculation methods to develop costs.
• After reviewing and finalizing costs, perform period-end processing (month-end

close) to value inventory and transfer journals to General Ledger.
The graphic describes the Cost Management process as explained below:

Standard Cost
Establish raw material, resource, and overhead costs and run the Standard Cost Rollup
process. View and verify the costs. If the costs are correct, then complete all inventory
transactions for the period and run the Inventory Close and Cost Update processes in
the final mode. Run the OPM Accounting Preprocessor and Create Accounting process
to create accounting entries in the OPM Subledger. Use the Create Accounting process
again to export the Subledger Journals to Oracle General Ledger.
Actual Cost
Record and verify transactions. Run the Actual Cost process, view, and verify the costs.
If the costs are correct, then run the Inventory Close and Cost Update processes in the
final mode. Run the OPM Accounting Preprocessor and Create Accounting process to
create accounting entries in the OPM Subledger. Use the Create Accounting process
again to export the Subledger Journals to Oracle General Ledger.
Lot Cost
1-2 Oracle Process Manufacturing Cost Management User's Guide

Record and verify transactions. If the costs are correct, then run the Lot Cost process in
the final mode. View and verify the costs. Run the Create Accounting process to create
accounting entries in the OPM Subledger. Use the Create Accounting process again to
export the Subledger Journals to Oracle General Ledger.
Defining Costs
OPM Cost Management lets you define costs by:
• Inventory Organization
• Item
Overview 1-3
• Cost Calendar and Period
• Cost Types
• Cost Component Class
• Analysis Code
Inventory Organization
Using OPM Costing, you can maintain different costs for an item at different Inventory
Organizations. If several organizations have the same cost, the Cost Organization
Association can be used to share the same cost across these organizations, by
eliminating the need for maintaining duplicate data.
Item
Define costs for individual items
Cost Calendar and Period

Define costs for each period in the cost calendar.
Multiple Cost Types (previously referred to as Cost Methods)

OPM Costing supports different Cost Types that can be used to monitor and analyze
costs. It has the ability to store cost of a single item in multiple cost types at any given
point of time, though only one is used for inventory valuation in OPM Subledger.
The cost methods supported are:
• Standard Cost
• Actual Cost
• Lot Cost
Cost Component
The unit cost of an item is usually broken down into several buckets that are attributed
to various sources that form the basis of the cost, for detailed tracking and analysis
purposes. Cost Component Classes identify individual buckets or component costs that
make up the total cost, for example, direct material costs, freight costs, labor costs,
production or conversion costs and so on. Any number of cost component classes can
be defined and used to break down item costs. The cost component classes are classified
into 5 different elements or usages: Material, Resource, Overhead, Expense Allocation,
and Standard Cost Adjustment types.

Analysis Code
An individual component cost identified by a particular cost component class can be
further broken down using cost analysis codes for more granular tracking of costs. The
cost analysis codes are used to group component costs from multiple cost component
class types to provide an alternate view of the total cost.
Establishing Standard Costing

When you select the standard cost calculation, you define the cost of ingredients in each
inventory organization during a specific period of time. The cost information remains
static during each defined time period. OPM Costing calculates the standard costs of
items using the Standard Cost Rollup, based on recipes, formulas, and routings defined
in the OPM Product Development application. The cost of ingredients, by-products, and
resources are apportioned to the co-products based on the cost allocation factor set up
for the co-products in the formula details in the OPM Product Development
application. With standard costs, you can enter a cost directly in the cost details. For
by-products, the costs are not calculated by Standard Cost Rollup or Actual Cost
process.
A positive cost of by-product means that you either sell or dispose it at a profit. A
positive cost for a by-product reduces the cost of the co-products. The cost of the
by-product is apportioned using the cost allocation factors that are defined in recipe
and are applicable to co-products also.
A negative cost of by-product means that you spend money to dispose off the
by-product. For example, waste treatment costs for any toxic by-product. In this case
the cost of the co-products are increased appropriately.
Standard cost lets you define the costs for items, formulas, formula ingredients, recipes,
and resources used during the production process.
For standard costs:
• Establish the formulas, routings, and recipes
• Run the Cost Rollup process
The cost of a product is based on:

• Formulas, recipes, and routings
• Resource costs
• Overheads
Overview 1-5
Establishing Actual Costing
This is a more dynamic method of calculating Item costs based on actual inventory and
resource transaction data. The following are the business transactions that are used to
calculate the actual costs:
• Purchasing receipts including Freight and Special Charges estimated on the PO,
returns, and corrections of receipts
• Paid Invoices
• Batch ingredient consumption and resource usage
• Opening inventory balances
• Cost overheads
• Cost adjustments
• General Ledger Expense allocations for indirect overheads
• All material transactions including internal order receipts
The cost allocation factors are determined from those set up in batch details in OPM
Process Execution. When a batch is created, the cost allocation factors are defaulted
from those set up in the formula, but you can edit them for the batch. With actual costs,
as you cannot enter a cost directly using cost details, you can enter an actual cost
adjustment entry to get a cost created for a by-product.
OPM also captures freight and special charges on a purchase order.
Allocating General Ledger expense is a method by which you can distribute the indirect
expenses of manufacturing (such as administrative and general expenses) to item costs.
The balances in the expense accounts are distributed to item(s) based on either fixed
percentages or dynamically derived using other General Ledger account balances, for
example, statistical balances that track the item quantities or resource usages.
Establishing Lot Costing

Lot costing, also known as Specific Identification Type costing, lets you calculate and
store costs at the lot level. That is, each lot has a unique cost associated with it and it
retains this cost until the entire lot is consumed. The lot costs are computed on a
perpetual basis.
• Lot costing lets you store unique costs for each lot.
• You can track the cost of a lot from its creation through all consumptions.

Retroactive Pricing
Oracle Process Cost Management uses retroactive prices in creating sub ledger postings.
Prices can change over the life of purchasing documents. The Retroactive Price Update
on Purchasing Documents concurrent program automatically updates purchase orders
and blanket releases retroactively with price changes. When this occurs, the accounting
is adjusted for the following:
• For purchase orders with a destination type of Inventory, the adjustment account is
posted to the Retroactive Price Adjustment account. This account is defined at the
organization level in the Receiving Options window in Oracle Purchasing. The
following accounts are not adjusted:
• Inventory and Work in Process valuation accounts
• Lot Cost types (costs are not recalculated)
• Purchase price variance

Consider an example, where the price of an item has changed from an original
price of 1000 $ to 1300$ i.e, a price increase of 300$. When the price change is
approved, adjustments for prior receipts are created as following when the
Event Type is Adjust Receive:
Account Debit Credit
Receiving Inspection 300$
Accrued Accounts Payable 300$
When the price change is approved, adjustments for prior receipts are created
as below when the Event Type is Adjust Deliver:
Retroactive Price 300$

Adjustment
Receiving Inspection 300$
• For purchase orders with a destination type of Expense, the adjustment amount is
Overview 1-7
posted to the Charge account specified on the purchase order. When a price change
is approved, adjustments are created in the following accounts:
Charge XX
Inventory AP Accrual XX
• Transfer of ownership transactions, created for consigned goods, are also adjusted
when the price on the associated blanket agreement is changed and approved.
Valuing Inventory and Resource Transactions

You assign values to inventory and resource transactions.
Transactions in OPM are mapped to the general ledger accounts you define in
Subledger Architecture (SLA) application. Costs of inventory organization items are
frozen for update to the subsidiary ledger.
Revaluing Inventory Cost

OPM lets you revalue your inventory based on a different cost value (cost type) within
the same period. You can also revalue inventory from one period to the next.
Valuing Inventory in Production

OPM Cost management calculates the cost of inventory during each stage of
production:
• Captures actual materials

• Generates variances
Valuing the Material Purchased

If you flag OPM to calculate purchase price variance (PPV) on purchase orders, OPM
calculates the variance and generates a general ledger account distribution for it.
Generating Cost of Sales

Costs of items shipped are also frozen prior to update of the transactions to the OPM
subsidiary ledger.
Monitoring and Simulating Costs
Monitoring Costs
OPM Cost Management provides several reports and inquiries to monitor and analyze
costs:
• Item Cost report
• Allocation report
• Subledger reports
• Lot Cost History report
Simulating Costs
OPM Cost Management provides the following simulations, and lets you establish
"what if" scenarios:
• Cost Type and Elements
• Cost Formulas, Recipes, and Routings

• Indicate the affect a change in a formula or production routing has on your
costs
• Prices, Labor Rates, and Overheads

• Indicate what impact new labor rates, raw material prices, and overheads have
on your standard costs
• Cost Rollups
Overview 1-9
• Determine the proposed cost of a new product
• Weighted Average Costing
The following diagram illustrates using multiple cost types, where cost type A is used
for general ledger posting, cost type B is being used to project the selling price for items,
and cost type C is calculated using actual data to develop new cost standards.

2
Setting Up
This topic includes procedures and values that you must define before using the
application. These basic setups are required regardless of whether you want to use the
standard, actual, or lot cost methods. This topic includes setting up in other
applications, profile options, and setting the cost calendar and costing periods, cost
analysis codes, cost type codes, and cost component classes.
A detailed description on setting up and calculating standard, actual, and lot costs are
provided in their topic discussions.
• Setting Up in Other Applications
• Setting Profile Options
• Understanding Cost Types
• Defining Cost Types
• Defining Cost Calendars
• Assigning Calendar to Legal Entity
• Setting the Period Status
• Defining Component Groups
• Defining Cost Component Classes
• Defining Cost Analysis Codes
• Defining Costing Organization Associations
• Defining Fiscal Policies
• Defining Event Fiscal Policies
• Assigning Ledgers
• Defining Percentage Overhead Codes
• Defining Overhead Priorities
Setting Up 2-1

• Defining Overhead Percentage
• Defining Source and Target Variable Overhead Components Associations
• Defining Cost Factors
• Defining Resource Costs
• Defining Fixed Overheads
Setting Up in Other Applications

Set up these prerequisites prior to running the application. Refer to the details for
setting up these requirements provided in the individual application user's guides
indicated. Depending on your individual requirements, there may be additional setup
required.
Setting Up in Oracle General Ledger

Set up the following in the Oracle General Ledger application. Refer to the Oracle
General Ledger User's Guide for details.
• Ledger
• Legal Entities
• Accounting Setup
• Currencies
• Currency Conversion Rates
Setting Up in Oracle Inventory

Set up the following in the Oracle Inventory application. Refer to the Oracle Inventory
User's Guide for details.
• Inventory Organizations
Required.
• Organization Parameters
Required.
• Subinventories
Required.
• Locators

• Units of Measure Classes
Required.
• Units of Measure
Required.
• Unit of Measure Conversions
• Master Items
• Organization Items
The following item attributes need to be set up for the items to be recognized and
costed in OPM Cost Management:
• Inventory Asset Flag
Enable the Inventory Asset Flag on the Costing tab to track an asset item.
• Select the Recipe Enabled, Process Costing Enabled, Process Execution Enabled
attributes on the Process Manufacturing tab to use organization items in formulas
and recipes as well as in OPM Cost Management.
Setting Up in OPM Product Development

Set up the following in the Oracle Process Manufacturing Product Development
application. Refer to the Oracle Process Manufacturing Product Development User's Guide
for details.
• Formulas
• Routings
• Recipes
• Validity rules
Setting Up in OPM Process Planning

Set up the following in the Oracle Process Manufacturing Process Planning application.
Refer to the Oracle Process Manufacturing Process Planning User's Guide for details.
• Resources
Setting Up in Oracle Pricing

Set up the following in the Oracle Pricing application. Refer to the Oracle Pricing User's
Setting Up 2-3

Guide for details.
• Price List (for Transfer Price)
The price list is used to retrieve the Transfer Price for Process to Discrete Transfers
and Intercompany Internal Orders.
Setting Up in Oracle Sourcing

Set up the following in the Oracle Sourcing application. Refer to the Oracle Sourcing
User's Guide for details.
• Cost Factors
The Cost Factors window is available directly from the OPM Cost Management and
also accessible from Oracle Purchasing applications.
Setting Up in Oracle Purchasing

Set up the following in the Oracle Purchasing application. Refer to the Oracle Purchasing
User's Guide for details:
• Receiving Options
• Purchasing Options
Setting Profile Options

The following table lists and describes various profile options and their recommended
change level.
Profile Option Description Default Options Recommended

Name Change Level
GMF: Actual This profile 200 200 Site,

Costing option sets the Applications
Maximum maximum
Iteration Limit number of
for Circular iterations.
Reference

Name Change Level
GMF: Actual This profile 1000 Any valid Site,

Cost Process option defines number Applications,
Error Limit the number of Responsibility,
AC Process User
generated errors
at which the
system aborts.
GMF: Commit This profile 1000 Any valid Site

Count in option lets you number
Accounting indicate the
Pre-Processor frequency of
database
commits within
the
Pre-Processor
program. A very
large value
requires a large
Rollback
Segment space
but performs a
little faster. A
small value
requires less
Rollback
Segment space,
but performs a
little slower
because of
frequent
commits and
memory
allocations. The
default value of
1000 suffices for
normal
processing.
Setting Up 2-5

Name Change Level
GMF: Copy Item Use this profile N Y = Copy item Site, Application,
Costs - Copy option to copy costs and recipe Responsibility,
Recipe over recipe information to User
Information to validity rule target
Target information to
the target N = Do not copy
periods using item costs and
the copy item recipe
costs program. information to
The profile target
option can have
a value of either
Yes or No. If the
value is set to
Yes, then only
the recipe
validity rules are
copied. The
profile value is
set to No at the
site level.

Name Change Level
GMF: Cost This profile NA Static Site, Application,

Allocation Factor option lets you Responsibility
Calculation specify the Dynamic
method for the
calculation of
batch cost
allocation. If you
select Static, then
the application
calculates the
batch cost
allocations based
on the cost
allocation factor
defined for each
product in the
production
batch. This is
how the costs
were allocated
before this
enhancement. If
you select
Dynamic, then
the application
calculates the
batch cost
allocations as a
ratio of actual
quantity of each
product
produced to the
total production
batch output
quantity.
Setting Up 2-7

Name Change Level
GMF: Cost The Actual Cost Diagnostic Diagnostic Site

Process Message process Messages Messages
Level Threshold generates a lot of
error and Warnings
warning Data Setup
messages during Errors
processing and
in a high volume Errors impacting
of data Cost
environment.
The threshold Fatal or Internal
value indicates System Errors
the type of error
messages to log
by the process.
The valid values
are Diagnostic
Messages,
Warnings, Data
Setup Errors,
Errors impacting
Cost, and Fatal
or Internal
System errors. It
is recommended
that you set this
to Warnings so
that any
mistakes can be
corrected before
further
processing.

Name Change Level
GMF: Costing This profile 0.000001 Tolerance Site, Application,

Tolerance option is used to percent value Responsibility,
Percent specify tolerance User
percentage for
circular
reference batches
in Actual
Costing. It fixes
the percentage of
the difference in
cost between
iterations
whether or not
the costs are
converged. For
example, if the
tolerance percent
is set as 0.01%,
then during the
iterative
calculation, if the
prior iteration
and current
iteration produce
results that are
within 0.01%,
then costs are
considered as
converged. This
profile option is
relevant for item
costing in
circular
reference batches
and
inter-organizatio
n transfers (For
example, when a
finished product
is being
transferred
across
organizations.)
Setting Up 2-9

Name Change Level
GMF: Delete This profile Yes No = Does not Site

Ingredient Cost option lets you delete the
When No specify whether ingredient costs.
Effectivity the Cost Rollup
Found process must Yes = Deletes the
delete or not ingredient costs
delete the when no
ingredient costs effectivity is
if no valid found.
validity rules are
found.
GMF: Exclude If this profile 0 1 Site, Application,

Invoices Which option is set to 1, Responsibility,
Have No then the Actual 0 User
Receipts Cost process
ignores invoices
that do not have
receipts in the
period for which
the cost is being
calculated. If set
to 0, then the
Actual Cost
process does not
exclude invoices
that have no
receipts.

Name Change Level
GMF: Exclude Use this profile 0 1 Site, Application,

Negative option to ignore Responsibility,
Inventory zero or negative 0 User
Balance beginning
on-hand
inventory during
PMAC cost
calculations. If
the profile value
is set to 0, then
the actual cost
process includes
negative or zero
onhand quantity
in PMAC cost
calculations. If
the profile value
is set to 1, then
during the raw
material and
product cost
calculations, the
previous period
balance and
previous period
component costs
are considered
zero for items
having zero or
negative
beginning
on-hand
inventory
quantity.
Setting Up 2-11

Name Change Level
GMF: Include This profile Yes Yes Site

Drop Shipments option
in Actual Cost determines No
whether drop
shipments are
included in
Actual Cost
calculations. The
default is Yes.
Set the profile to
No to ignore
drop shipments
and only include
other
transactions in
actual cost. It is
recommended
that you set this
profile to Yes.
GMF: Include This profile No Yes Site,

Inventory option lets you Applications,
Movements in control the No Responsibility
Actual Cost inclusion of
inventory
movements in
the Actual Cost
calculation
process. It can be
set to Yes or No.
The default is
No. If it is set to
Yes, then the
Actual Cost
process includes
inventory
movements in
the cost
calculation. If it
is set to No, then
inventory
movements are
not considered
in the cost
calculation.

Name Change Level

Inventory option
Transfers in determines No
Actual Cost whether
Inventory
Transfers are
included in
Actual Cost
calculations. The
default value is
Yes. Set the
profile to No, if
you want to
ignore transfers
and only include
other
transactions in
actual cost. It is
recommended
that you set this
profile to Yes.
Setting Up 2-13

Name Change Level
GMF: Include This profile 1 1 = Include Site

Invoices in option controls invoices in cost
Actual Cost the inclusion of calculation
invoice
transactions in 0 = Exclude
the Actual Cost invoices in cost
calculation calculation
process. This
profile option
can have a value
of either 1 or 0.
The default
value is 1. If the
profile value is
set to 1, then the
Actual Cost
process includes
invoice
transactions in
cost calculations.
If the profile
value is set to 0,
then the invoice
transactions are
not considered
in the cost
calculations.

Name Change Level

Production option indicates
Batches in whether No
Actual Cost production
batches are
considered in
actual cost
calculations. The
default value is
Yes. The profile
is for
troubleshooting
and debugging
purposes only.
Set to No only if
requested by the
Oracle Support.
It is
recommended
that you set this
profile to Yes.

Receipts in option
Actual Cost determines No
whether Receipts
are included in
Actual Cost
calculations. The
default value is
Yes. Set the
value to No, only
if you want to
use invoices and
transfers for
actual costs. It is
recommended
that you set this
value to Yes.
Setting Up 2-15

Name Change Level
GMF: Log All This profile No No = The Site

Subledger option calculates subledger
Variances variances for all variances are not
of the three logged to the
variance types separate table
(Scale to Plan, and only one
Scale to Actual, variance type is
Aggregate) and calculated as
stores them in a specified in the
separate table for profile option,
analysis. Refer to GMF: Subledger
"Accounting Variance Type.
Setup and
Account Yes = The
Processes and Subledger
Distribution" process
topics in this calculates
guide for more variances for all
details. of the three
variance types
(Scale to Plan,
Scale to Actual,
Aggregate) and
stores them in a
separate table.

Name Change Level
GMF: Log If an Item's cost No No Site

Frozen Error is already frozen
Messages in Cost by a final cost Yes
Rollup update, then
Cost Rollup does
not rollup the
cost of this item
if run again,
even if any of the
ingredients or
routing costs
have changed. If
you set the
profile to Yes,
then the
application logs
a message that
an item's cost
was not
recalculated
when it is frozen.
The default
value is No.
GMF: Standard Defines the 1000 Any valid Site,

Cost Rollup number of number Applications,
Error Limit Rollup generated Responsibility,
errors at which User
the system
aborts.
Setting Up 2-17

Name Change Level
GMF: Subledger This profile Scale to Plan Scale to Plan = Site

Variance Type option contains Scale the costing
the variance type formula to
which the planned quantity
Subledger of the primary
process uses to product in the
calculate and batch and
post variances compare with
for the the actual batch.
production
transactions. Scale to Actual =
Specify any of Scale the costing
the above formula to actual
mentioned quantity of the
variance types as primary product
a value. Refer to in the batch and
"Accounting compare with
Setup and the actual batch.
Account Aggregate =
Processes and Calculates
Distribution" Aggregate type
topics in this variances.
guide for more
details.
GMF: Use Cost The Lot Cost No No Site

Alloc Factor in Process uses the
Lot Costing actual quantities Yes
yielded or
transferred at
each production
setup to arrive at
the cost
allocations for
co-products. Set
this profile to
Yes, if you want
to use the default
cost allocation
factor set up for
the batch
products. The
default value is
No.

Name Change Level
GMF: Use Only Determines what 0 0 or 1 Site

Costing Validity validity rules to
Rules for Cost use during the
Rollup Cost Rollup
process. This
affects cost
calculations. If
the profile value
is set to 0, then
costing validity
rules are used if
available.
Otherwise, the
Cost Rollup
process uses
production
validity rules. If
the profile value
is set to 1, then
only costing
validity rules are
used.
Setting Up 2-19

Name Change Level
GMF: Use PO It is not possible No No Site

Acquisition to enter the
Costs for Invoice actual freight Yes
and other costs
at the time of
invoicing. If the
profile is set to
Yes, then Actual
Cost picks up the
estimated freight
and other
charges entered
at the time of
creating a
purchase order
as applicable to
the invoice as
well. The default
value is No. If
the value is set to
No, then the
Actual Cost does
not include these
charges.

Name Change Level
GMF: Use This profile No No Site, Application,

Substitute Items option lets you Responsibility
in Standard specify whether Yes, use period
Costing to use the start date as
original formula effective date
item or the Yes, use period
substitute item end date as
in the product effective date
cost calculations.
If you select No,
then the
application uses
the original item
for cost
calculations. This
is the default
value. If you
select Yes, use
period start date
as effective date,
then the
application uses
the substitute
item. The most
appropriate
substitute item is
determined
using the costing
period start date
as the effective
date. The costing
period start date
must be within
the item
substitution's
effective start
and end date as
set up in the
OPM Product
Development
application. If
you select Yes,
use period end
date as effective
date, then the
Setting Up 2-21

Name Change Level
application uses
the substitute
item. The most
appropriate
substitute item is
determined
using the costing
period end date
as the effective
date. The costing
period end date
must be within
the item
substitution's
effective start
and end date as
set up in the
OPM Product
Development
application.

Name Change Level
GMF: Landed This profile None You can set the Site,
Cost option lets you profile option to: Responsibility
Adjustments specify the
• Apply
Transfer Method method in which
to Inventory in you want to whole LC
Actual Costing transfer the adjustments
landed cost to Inventory
adjustments to to consider
inventory in adjustment
Actual costing. as in period
adjustment
and apply
the whole
adjustment
amount to
calculate
average cost
calculation.
• Apply LC
Adjustment
s based on
the Period
Opening
Balance if
you want to
derive the
prorated
amount and
include it in
cost
calculations.
Setting Up 2-23

Name Change Level
GMF: Compute This profile Yes Yes Site

Ingredient Cost option lets you
in Target determine if the No
Organization ingredient cost
Based on has to be created
Sourcing Rules in a Target
Organization. If
the profile value
is set to Yes , the
ingredient item
cost is created in
Target
Organization ,
provided there is
no pre-existing
cost and the cost
origin is
stamped as
Sourcing Rule.
Understanding Cost Types

OPM supports Actual, Standard, and Lot costing calculation types for items. Define a
cost type as one of the following:
• Standard
• Actual Cost
• Lot Cost
Cost type codes identify specific groups of cost data according to their purpose. You can
define unlimited number of cost types in OPM to differentiate the cost type used for
inventory valuation versus simulated costs developed for Sales or Management
purposes.
Standard Costing
If you select this costing type, then you enter the costs of raw materials, for example,
based on estimates. OPM calculates product costs based on formula, routings, recipe
details, and other indirect costs such as standard overheads.
The item costs are established for a specific costing period and remain the same during

the period. Calculations are based on these standard values, regardless of real costs
(that is, actual transaction costs) of items. The standards can be established based on
estimates derived from historical information or actual costs calculated in prior costing
periods or years.
When inventory is valued in the OPM Subledger, appropriate variances are generated
between the standard cost and the actual consumptions and usages recorded on the
transactions.
Standard Cost Data

OPM uses the following data to calculate standard costs:
• Formulas
• Routings
• Recipes
• Validity Rules
• Overheads
Actual Costing
Actual Costs of items are developed using the actual business transactions. The product
costs are not based on the formula, routing and recipe details but rather based on actual
consumptions of materials and resource usage recorded in the production batches
The costs are calculated using one of several weighted average or last cost methods by
aggregating transactions recorded over a cost period.
The cost calculation method selected for raw materials need not have to be the same as
the one selected for products. You can mix and match various methods and decide on a
combination that best suits your needs.
Actual Cost Methods Supported

The following are the Actual Cost Types Methods that are supported:
• Period moving average cost (PMAC)
• Period weighted average cost (PWAC)
• Perpetual weighted average (PPAC)
• Last transaction (LSTT)
• Last invoice (LSTI)
Setting Up 2-25

Last Transaction and Last Invoice methods are supported only for Raw Materials.
Cost Calculations
You can use three different time frames to develop actual Cost averages:
• Current period data only
• Current period data with the beginning inventory balance
• Current period data averaged with actual cost data from the beginning of the cost
calendar
For example, assume you have a steady level of production for 10 straight periods in a
cost calendar. If production skyrockets in the 11th period, then production costs for that
period skyrocket as well.
OPM uses one of the following types to figure raw material cost so that those costs are
redistributed and leveled, over a greater period of time:
• Period Moving Average Cost (PMAC)
• Period Weighted Average Cost (PWAC)
• Perpetual Average Cost (PPAC)
Note: With actual costing, items for which there are no transactions in a
calendar period will have cost components moved and carried over
from the previous period to the current period. This insures that all cost
items have an actual cost within the period processed.
You can have raw materials calculated based on Period Weighted Average Cost
(PWAC) and products based on Period Moving Average Cost (PMAC).
Actual Costing Basis

The following paragraph describes transactions that are used as basis for actual cost
calculations:
Purchase Order Receipts

The raw material estimate price established on a PO is used as the price for receipts
Invoices Recorded in Accounts Payable

The estimated price on a PO can be different from the actual amount paid to the
Supplier when an invoice is received. OPM captures the actual, final prices paid for raw
materials on the invoices and the price on the invoice overrides the price recorded on
the receipt.

Production Batches
OPM calculates the actual cost for a finished product based on actual ingredient
consumption and resource usages recorded in production batches.
The product material costs are based on the actual raw material usages in batches and
the cost calculated for the raw materials. The product resource costs are calculated
based on resource usages and the nominal cost established using resource costs setup.
Expense Allocations
Expenses accrued in General Ledger can be allocated to specific items as indirect
overhead costs.
Overheads
You can assign and apply overhead costs to either raw materials or finished goods. The
overhead cost calculation for actual cost rollups is identical to that used for standard
cost rollups.
Actual Cost Adjustments

Actual Cost Adjustments let you fine tune the final component cost of an item, based on
individual business situations.
Options for Smoothing

You can use three different time frames to develop average actual costs:
• Current period data only
• Current period data average with the ending inventory valuation from the last
period
• Current period data averaged with actual cost data from the beginning of the cost
calendar
For example, assume you have a steady level of production for 10 straight periods in a
cost calendar. If production soars in the eleventh period, then production costs for that
period also soars.
OPM uses one of the following types to calculate raw material cost so that these costs
are redistributed and leveled over a greater time frame:
• Period Moving Average Cost (PMAC)
• Period Weighted Average Cost (PWAC)
• Perpetual Average Cost (PPAC).
Setting Up 2-27

Note: With actual costing, items for which there are no transactions
in a calendar period will have cost components moved from the
previous period to the current period. This insures that all cost
items have an actual cost within the period processed.
The raw material calculation and product calculation types can be different. For
example, raw materials can be calculated based on Period Weighted Average Cost
(PWAC) and products based on Period Moving Average Cost (PMAC).
Inventory Transfers
Inventory can be transferred from one organization to another using a simple
Inter-Organization Transfer or usingInternal Orders where necessary supporting
documents are required. Actual Cost will consider the inventory transfers between
process inventory organizations within the same Legal Entity at the source organization
cost. For transfers that go across Legal Entities, transfer price is used. For transfers that
originate from a discrete inventory organization to a process inventory organization,
transfer price is used regardless of whether the transfer is within or across Legal
Entities.

Lot Cost Type
The Lot Costing, also known as Specific Identification Type costing, lets you calculate
and store costs at the lot level. Each lot has a unique cost associated with it and it retains
this cost until the entire lot is consumed. The lot costs are computed on a perpetual
basis, in other words, there is no concept of a cost period as in standard or actual cost
methods.
The transactions that are used as basis for lot cost calculations are:
• Purchase order receipts
• Production batch
• Overheads
• Lot Cost adjustments
• Inventory Transfers
OPM also supports Lot Split, Lot Merge, and Lot Translate.
Defining Cost Types

The subsequent paragraphs describe setting up cost types.
To enter a cost type:

1. Navigate to the Cost Types window.
2. Enter the Cost Type to represent code that identifies the costing method to be used
in cost calculations. For example, enter STND for standard costing. Required.
3. Enter a brief Description of the cost type. For example, enter Standard Costing for
the standard cost type. Required.
4. Indicate the Cost Method you are defining:

• Standard Cost
• Actual Cost
• Lot Cost
If Lot Cost is selected then the Raw Material Calculation type and Product
Calculation type are not applicable and they are disabled.
5. Usage indicates if the cost type is for general or lab use. The general usage type is
Setting Up 2-29

set by default. If you set the usage to general use, then the cost rollup considers only
Production and Costing Recipes with Validity Rules at Status 'Approved for
General Use' or 'Frozen' for processing. If you set the usage to lab use, then the cost
rollup considers recipes with validity rules with the "Approved for General Use"
status and preferred to the production or costing recipes if they exist The usage
field is valid only for the standard cost method only. If you are using the actual or
lot cost type, then this field is disabled.
6. Raw Material Calculation Type is available only if you are defining the Actual
Costing type in the Cost Type field. Indicate the type of raw material cost
calculations that occur for this actual costing type. The valid options are:
• Last transaction (LSTT)
• Last invoice (LSTI)

The type descriptions (shown in parentheses) are abbreviations for these
calculation types. The lookup displays both the calculation type and the
abbreviation. Required.
7. Product Calculation Type is available only if you are defining the Actual Costing
type in the Cost Type field. If you want OPM to derive actual costs for product
components, indicate the type of calculations to perform. The valid options are:

The type descriptions (shown in parentheses) are industry standard
abbreviations for these calculation types; the lookup displays both the
calculation type and the abbreviation.
Lot Cost Type

8. Start Date is only available for Lot Cost types. Enter a start date. The start date is
used to collect all transactions that happened after the specified date for lot cost
calculation purposes.
If this field is left blank, then the Lot Cost process uses all transactions in the system
for the legal entity for which the Lot Cost process is run. If you have several years
worth of transaction data, a large number of transactions may be processed

resulting in poor performance of the Lot Cost process. It is recommended that you
set a past date that sufficiently covers most of the lots that are active and have
current onhand balances. This way you can have the process ignore lots that have
been used long ago and are not currently in use. For example, if the current period
is January 2004, then you can specify January 1st, 2003, to ensure all transactions
from the prior year are considered.
9. Enter the Alternate Cost Type.

Only Standard and Actual cost types are allowed. Under Lot Costing, you can have
a subset of lot controlled items costed at the lot level. For other lot controlled items
and non-lot controlled items, the alternate cost type is used to determine the cost
the items.
Defining Cost Calendars

You maintain costs by defining the costing calendars. A cost calendar can be shared
across multiple cost types and legal entities. A cost calendar can span multiple years.
For each costing calendar, you can define an unlimited number of costing periods. Each
period is assigned a period status to indicate costing activity that is permitted.
• Never Opened - the period was never opened. You cannot establish costs or run
any cost processes in a never opened period.
• Open - all activity is allowed.
• Frozen - no updates can be made for existing items (however, new item costs can be
entered or calculated and their costs updated).
• Closed - no activity is performed in a closed period. Periods cannot be reopened for

costing activity once they are closed.
The costing calendar is completely separate from the fiscal calendar and the periods
therein. Cost Calendars support multiple legal entities and cost type. You cannot assign
two calendars to the same legal entity and cost type combination for the same time
period. For example, if you define a cost calendar called FY06 - monthly calendar for the
year 2006 and assign to a Legal Entity and cost type, you cannot assign another cost
calendar, Q06 - quarterly calendar for year 2006, to the same Legal Entity and cost type
combination.
If you are using the Period Moving Average Cost, then use the same start and end dates
for the period as the fiscal financial calendar defined for your Legal Entity's Primary
Ledger in GL.
The Cost Calendars window supports multiple languages (MLS enabled). When you
call this window, the Globe icon is enabled. If you have multiple languages installed,
then use the option to add the calendar description in any of the installed languages.
Setting Up 2-31

To define a cost calendar:
1. Navigate to the Cost Calendars window.
2. Enter the name of the cost Calendar (for example, enter 2007). Required.
3. Enter a brief Description of the cost calendar. For example, enter Fiscal Year 2007.
4. Enter the date on which this calendar becomes effective in Start Date. Required.
Cost Calendar Details Panel

5. Enter a code to identify the Period which can be any code you wish. If the cost
calendar represents a 12-period fiscal year, you might want to enter 1 through 12.
Required.
6. Enter a brief Description of this calendar period. For example, if this is the first
period of a fiscal calendar, enter January. Required.
7. Enter the Start Date of this calendar period.
8. Enter the last date of this calendar period in End Date.
Cost Calendar - Additional Menu Features - Actions Menu

Close Period - Select this option when you are sure that there are no more cost changes
to be made. Select Close Period from the Actions menu to close a costing period and
assign it Closed status.
Close all the previous periods before closing the current period.
Assigning Calendar to Legal Entity
To assign calendar to a legal entity:

1. Select Assignments from the Cost Calendars window.
The Calendar and Description are default from the Cost Calendar window.
Assignments Details Panel

2. Enter the Legal Entity to which you want.
3. Enter the Cost Type code to be used as a default for this cost calendar. The cost type
default is used as a typing aid to speed data entry on OPM Costing forms.
Required.

4. Enter the Description.
Setting the Period Status

1. Select Period Status from the Assign Cost Calendars window.
The specified Legal Entity and Cost Type display.
Period Status Details Panel

2. Enter the Period.
3. Enter the Description.
4. Enter the date on which this calendar becomes effective in Start Date. Required.
5. Enter the date until which this calendar is effective in End Date. Required.
• Never Opened
• Open
• Frozen
• Closed
6. Period Status displays the status of each period in the cost calendar.
Flexibility in Restricting Cost Updates

Transactions (regardless of cost type) can be made to Open calendar periods. OPM
gives you the capability to Freeze existing costs from further modifications (such as cost
rollups, actual cost processing, and cost updates) in a specific calendar period.
However, new item cost transactions may be added. You can also Close a period, which
prevents any further costing changes to be made within the specified period.
• Never Opened - Indicates that the period is not opened for transactions yet. You
cannot establish costs or run any cost processes in a never opened period.
• Open Periods - The status of each new period you define defaults to Open, which
means that all daily transactions can be updated to the period. Each period remains
open until the Final Cost Update (see "Cost Update") is run successfully.
• Frozen Periods - When you do not anticipate further changes to transactions, you
can automatically Freeze the period by running the Final Cost Update. In a frozen
calendar period, no further modifications (such as cost rollups, actual cost
processing, and cost updates) can be made to existing, updated costs.
Setting Up 2-33

However, newly-created component cost details can be entered, (selectively) rolled
up, then updated and included without affecting those costs already frozen.
Note: You cannot delete the frozen cost periods.
• Closed Periods - You should consider closing a costing period only when you are
sure that there are no more cost changes to be made. Select Close from the Actions
menu to close a costing period.
Closing a period prevents any modifications to be made to the costs within the
period, effectively locking them from further changes. No new item costs may be
entered, no rollups may be performed, and no cost updates may be performed for
the period. You cannot reopen an already closed period for a transaction.
Defining Component Groups

Component groups lets you collect specific material and or resource component costs
for category groupings (for example, material costs and resource costs). Components
groups can be used for custom reporting and analysis.
To define component group:

1. Navigate to theComponent Group window.
2. Enter the Component Group into which material and/or resource costs are
collected for reporting purposes. Required.
3. Enter a brief Description of the component group you are adding. Required.
Defining Cost Component Classes

The unit cost of an item is usually broken down into several buckets that can be
attributed to the various sources that form the basis of the cost, for detailed tracking and
analysis purposes. Cost Component Classes are used to identify the individual buckets
or component costs that make up the total cost, for example, direct material costs,
freight costs, labor costs, production or conversion costs and so on. Any number of cost
component classes can be defined and used to break down the item costs. The cost
component classes are classified into 5 different elements or usages: Material, Resource,
Overhead, Expense Allocation and Standard Cost Adjustment types
Costs from several ingredients, routings, overheads, and allocations can be summarized
into one or more component classes.
The Cost Component Classes window supports multiple languages (MLS enabled).
When you call this window, the Globe icon is enabled. If you have multiple languages

installation, then you can select this option to enter the cost component class description
in any of the installed languages.
Cost Component Class Examples
In a particular formula, you have two ingredients: one is a dry raw material (assigned a
component class code called DRYMAT) and the other is a solution (assigned component
class SOLMATL2). When you view the product costs, the Item Cost window shows
DRYMAT and SOLMAT as the cost components, each with its respective cost.
You can associate the component class to multiple raw materials. For example, you can
assign all dry raw materials to component class DRYMAT and all solutions to class
SOLMAT. However, if a formula contains more than one raw material with the same
component class, then the costs for each material is summarized and appears once
under the component class on the Item Cost window.
For example, a formula containing two raw materials (class RAWMAT) appears as
having only one raw material component class on the Item Cost window. The costs for
both raw materials are summarized in the total for component class RAWMAT.
To define cost component classes:

1. Navigate to the Cost Component Classes window.
2. Enter the code to identify the Component Class. For example, enter DRYMAT for
raw materials, or SOLMAT for solutions. Required.
3. Enter a Description for the component class. For example, enter Raw Materials or
Solutions. Required.
4. You have the option of building component class association hierarchies for
reference and reporting purposes. The Primary Component Class indicates the
primary cost component class with which the component class you are defining
now is associated. The default is the class code you specified in the Component
Class. You can change the entry.
5. Component Group is an optional entry that lets you further group the component
classes for analysis and reporting purposes.
6. Usage indicates if this cost component classification is being entered for use as a
material, overhead, resource, or expense detail from routings. Select one of the
following values (Required):
• Material
• Resource
• Overhead
Setting Up 2-35

• Expense Allocations
• Std Cost Adjustment
Once you set the usage indicator for a component class, it cannot be changed after
costs have been defined using this component class.
Once costs have been created or calculated using a component class, the usage
cannot be changed.
7. Enter the Sort Sequence for the component class. It indicates the order in which
component classes displays on forms and reports. 1 is the first or top line and 2
indicates the second line, and so on. A zero (0) lets the application to determine the
sort order. Required.
8. The double brackets ([ ]) identify a descriptive flexfield. You can use these
descriptive flexfields to enter more information for each cost component class.
9. Product Cost Calculation indicator lets you flag those component costs to be
excluded from the Cost Rollup process. Certain identifiable costs (for example,
transfer costs) are for specific ingredient items, and are not required to be rolled up
into the products. The valid values are:
• Include in Product Cost Calculation
• Exclude From Product Cost Calculation
Select Exclude From Product Cost Calculation if this is a non-product cost

component class. The default, Include in Product Cost Calculation, applies if the
component class must be included. This flag is not applicable for Lot Cost.
10. Valuation Option indicator lets you identify whether the component class must be
used for valuing inventory or not. The valid values are:
• Will be used for inventory valuation
• Will not be used for inventory valuation
11. The valid values for Purchase Price Variance are:
• Include in Purchase Price Variance Calculation
• Exclude from Purchase Price Variance Calculation
Select the Include in Purchase Price Variance Calculation option (default), if the cost
for this component class is used in calculating the inventory valuation for purchase
price variance (PPV). Select the Exclude from Purchase Price Variance Calculation
option, if the component class must not be used in PPV calculations.

To process indirect component for standard costing:
1. Navigate to the Component Classes window.
2. Choose Standard Cost Adjustment for Usage.
3. After completing the Cost Component Classes window, open the Item Costs
window by selecting Item Costs from the Inquiries menu.
4. Complete the Item Costs window. Enter the unit cost reflecting the revision or
adjustment indicated on the Cost Component Classes window. See: Item Costs.
5. When you add a new cost, it is recommended that you perform a cost rollup and
cost update to calculate the revised unit cost and process the GL financial cost,
respectively. See: Cost Rollup and Cost Update.
Indirect Component Processing for Standard Costing
When standard costs are used, you can update adjustments or indirect components
of standard product costs separately without defining formula routings and/or
overhead details. You can identify the standard indirect cost component, update
non-direct materials and resources within production batches, and reconcile "batch
close" variance at the close of a production batch.
Defining Cost Analysis Codes

An individual component cost identified by a particular cost component class can be
further broken down using cost analysis codes for more granular tracking of costs. The
cost analysis codes are used to group component costs from multiple cost component
class types to provide an alternate view of the total cost. For example, you can define
direct or indirect analysis codes for each cost component. Consider the following
example:
• Item: ABC
• Inventory organization: A
• Cost Calendar/Period: June, 2001
Component Analysis Value
MATERIAL DIR $18.765948788
LABOR DIR $22.150682432
Setting Up 2-37

Component Analysis Value
INDIRECT EXPENSE IND $13.502400000
PACKAGING DIR $ 5.765980654
Total Item Cost n/a $60.185011874
DIR = Direct Costs

IND = Indirect Costs
As shown in the example, you can assign the same analysis code to multiple cost
components.
To define cost analysis code:

1. Navigate to theCost Analysis Code window.
2. Enter the Code to identify the cost analysis type. For example, DIR for Direct Costs,
or IND for Indirect Costs. Required.
3. Enter a Description for the analysis code. For example, enter Value Added or
Non-value Added. Required.
Defining Costing Organization Associations

OPM maintains separate item costs for each inventory organization. However, you can
have a situation in which multiple inventory organizations transact the item, but the
item costs in all of those organizations are the same. In such cases, OPM lets you create
a costing organization and share it with other inventory organizations.
OPM lets you associate a single costing organization with multiple inventory
organizations through costing organization associations. Each association is assigned a
date effectivity rage which dictates when the association is valid. OPM uses these
associations to determine the organization to which actual cost calculations is updated.
You can establish organization associations for standard or actual costing. Organization
associations are not mandatory. Costing organization costs are only effective for items
in those inventory organization linked to it.
Note: The start and end dates should encompass a complete Costing
Period for which the association needs to be effective. For example, if
the Costing Period start on 01-Jan-2006 and ends on 31-Jan-2006, the

association effective dates must be 01-Jan-2006 and 01-Feb-2006 to
completely include the last day of costing period.
To define costing organization:

1. Navigate to the Cost Organization Associations window.
2. Enter a valid organization code that is the costing organization in Cost

Organization. You define organizations on the Organization window. The
organization description from the Organization window displays automatically.
Required.
3. The Legal Entity linked to the organization displays. You cannot edit this field.
Associated Organizations
4. Enter the Inventory Organization that you are linking to this costing organization.
You can link an inventory organization to one costing organization for a date range.
Required.
5. The organization description from the Organizations window displays

automatically in Name. You cannot edit this field.
6. The cost or inventory organization association is effective only during the date
range that you enter. Indicate the opening date in the effectivity range in Start Date.
Required
7. The cost or inventory organization association is effective only during the date
range that you enter. Indicate the closing date in the effectivity range in End Date.
Required.
Defining Fiscal Policies

The Fiscal Policy options define the Legal Entity-wide parameters that determine the
cost type that will be used for inventory valuation, the default material and overhead
cost components and analysis codes for actual cost processing, additional cost types
used for costing simulations
Following are the procedures to establish fiscal policy options. The "Event Fiscal
Policies" and "Assign Additional Ledger Valuation Methods" topics provide mote
details on setting up additional details for a Legal Entity.
To define fiscal policies:

1. Navigate to the Fiscal Policies window.
Setting Up 2-39

2. Enter the Legal Entity name for which you are defining fiscal policy options.
Required.
3. Enter the name of the default Ledger for this fiscal policy company.
4. Displays the Base Currency code for this company.
5. Enter the cost type to use for inventory valuation in Valuation Method.
6. Indicate if the fiscal policy is based on costs from the previous cost period or the
current period in Cost Basis.
Default Material Component

7. Enter the default material component that identifies the cost component to be
applied to the fiscal policy in Component Class. Required
8. Enter the code that identifies the cost Analysis Code to be applied to the fiscal
policy.
Default Overhead Component:

1. Enter the default overhead component that identifies the cost component to be
applied to the fiscal policy in Component Class. Required
2. Enter the default overhead Analysis Code that identifies the cost analysis code to
be applied to the fiscal policy.
Fiscal Policies Actions Menu

• Event Fiscal Policy - The Event Fiscal Policy lets you customize certain features of
the Subledger and Journal Update process.
Defining Event Fiscal Policies

This topic describes event fiscal policy.
1. Navigate to the Event Fiscal Policies by clicking the option or selecting it from the
Actions menu.
2. Enter the Legal Entity for which you are defining the event fiscal policy. Required.
3. Enter the predefined Event Entity.
4. Enter predefined event class assigned to the event entity in Event Class.

5. Indicate whether purchase price variance is to be recognized for booking inventory
at standard cost or at the PO Unit Price in Purchase Price Variance-Purchase
Orders. The valid options are:
• Book INV at Item Cost (PPV)
• Book INV at Receipt Price (no PPV)
• Book INV at Invoice Price
Note: If you use standard costing, you can set the PPV option to
either book at Item Cost (PPV is generated) or Book at Receipt Price
(no PPV is generated for Receipts). If you use Actual Costing, it is
recommended that you set the option to Book at Receipt Price for
easier reconciliation at month end.
6. Indicate whether purchase price variance is to be recognized for booking inventory

at standard cost or at the PO Unit Price in Purchase Price Variance-Internal Orders
. The valid options are:
• Book INV at Item cost (PPV)
• Book INV at transfer price (no PPV)
7. Set Landed Cost Charges to:

• Accrued to Item A/P Account to indicate that freight, storage, taxes, and special
charges accrue to the item's AP account.
• Accrued to Accrual Account indicate that freight, storage, taxes, and special
charges accrue to the item's own accrual account.
Assigning Ledgers
You assign valuation methods to ledgers.
To assign valuation methods or ledgers:

1. Select Assign Valuation Methods from the Fiscal Policies window.
The selected Legal Entity displays.
The primary ledger and cost type selected in the fiscal policy for inventory
valuation display in this window but you cannot change the cost type here.
2. Enter the secondary ledger in Ledger Code.
Setting Up 2-41

3. The ledger Description displays.
4. Enter a different Cost Type to use for simulation.
5. The cost type Description displays.
Defining Percentage Overhead Codes

This window helps you maintain percentage overhead codes, descriptions, usage levels,
basis level, and optional descriptive flexfield information. The percentage overhead
code contributes to the cost of an item.
The usage level (listed below) specifies at what level cost is affected by the percentage
overhead code:
• Applied to Ingredient but added to Product (that is, Consumption)
• Applied to Item and added to itself (that is, Direct or Production)
The basis level lets you specify if the percentage overhead should be applied to this
level item cost or to the total item cost.
Based on the selected basis option, the Cost Rollup process applies percentage overhead
rules either to this level cost components or to all cost components of the item cost.
If you have already set up percentage overhead codes, then select the basis value for
these codes. If you do not select the basis value, then the Cost Rollup process considers
Total Cost as the default value and applies percentage overheads to the total item cost.
To define percentage overhead codes:

1. Navigate to the Percentage Overhead Codes window.
2. Enter a unique Code that identifies a percentage overhead. For example, SHR.
Required.
3. Enter a description for the code in Description. For example, enter Shrinkage for
the percentage overhead code SHR. Required.
4. Usage lets you enter at what level cost is affected by the percentage overhead code.
The percentage can either be applied to an ingredient but added to the product or
applied to an item and added to itself. Required. The two usage options are:
• Applied to Item and added to itself (that is, Direct or Production)
• Applied to Ingredient but added to Product (that is, Consumption)
These options let you add percentage overhead cost to an item when it is either

produced or consumed. For example, if Item A has associated overhead costs when
it is produced, then a percentage overhead code with the usage indicator "Applied
to Item and added to itself" should be defined. The percentage overhead incurred
on producing Item A is determined by applying overhead percentage to component
costs of Item A and added to the cost of Item A. Similarly, if Item A has a type of
percentage overhead cost which is incurred during consumption, then define a
separate percentage overhead code with usage indicator "Applied to Ingredient but
added to Product". In such a case, any product which uses Item A as an ingredient
will have percentage overhead costs added to its cost.
5. Basis lets you enter if the percentage overhead should be applied to this level item
cost or to the total item cost.
• This Level Cost - Applies percentage overhead rules to this level cost
components of the item cost.
• Total Cost - Applies percentage overhead rules to all the cost components
including this level and the lower level of the item cost.
6. The double brackets ([ ]) identify a descriptive flexfield that lets you add data fields
to this window without programming.
Defining Overhead Priorities

The usage of percentage overhead code is categorized by attaching it to one or more of
the following entities in the required order:
• Item
• Item GL Category
• Item Cost Category
• GL Business Class
• GL Product Line
For each entity, you can assign different overhead priorities for a given legal entity code
and a percentage overhead code. You can assign numerical sequential values for the
given overhead entities. Only the priority entities that have values assigned impact the
specific overhead percentage definition. The remaining entities do not appear on the
Overhead Percentage window and does not impact cost rollup and how percentage
overhead cost is calculated for the percentage overhead code.
Setting Up 2-43

To define overhead selection priorities:
1. Navigate to the Overhead Selection Priorities window.
2. Enter the Legal Entity for which you are defining overhead priorities. Required.
3. Enter the Overhead Code for which you are defining overhead priorities. For
example, enter SHR for the Shrinkage. Required.
Priorities
4. After the overhead code is entered, the attributes associated with the indicated
overhead code are displayed in Overhead Entities. Starting with the number 1
(1=highest priority), enter a priority number next to each field to be used for
defining and retrieving costing overhead percentages. If a field does not have a
number, it will not be used for overhead percentage definition and retrieval. None
of the fields are mandatory but at least one field is required in order for the record
to be saved. Do not use the same priority for two fields. Required.
Following is a list of all attributes:
• Item
• Item GL Category
• Item Cost Category
• GL Business Class
• GL Product Line
Defining Overhead Percentage

You can define the actual overhead percentage value for a given overhead code. The
overhead percentage is defined for a given calendar, period, cost types, and overhead
code. The overhead entities defined on the Overhead Selection Priorities window is
used to define overhead percentages.
This window displays the GL Business Class and GL Product Line fields, if you had
selected them as one of the priorities in the Overhead Priorities window.
To define overhead percentages:

1. Navigate to the Overhead Percentages window.

2. The Legal Entity displays. The overhead percentages you define using this window
are assigned to the legal entity.
3. Enter the name of the cost Calendar (for example, enter 1997) for which overhead
percentage is being defined. Required.
4. Enter the cost Period for which the overhead percentage is being defined. Required.
5. Enter Standard as the Cost Type code to be used. Only the Standard Cost type is
supported. Required.
6. Enter or select a Overhead Code for which percentage will be specified. The system
then looks for all the entities that have selection priorities assigned to them for the
specified overhead code and legal entity for the given calendar and displays them.
Choose any values for these priorities for which you are defining the overhead
percentage. Required.
Note: Depending on the specified Overhead Code, the system

retrieves and displays all the entities that have selection priorities
assigned to them on the Overhead Priorities window.
7. Enter the Percentage value associated with the overhead code and entities to be
applied to items component costs. The cost components that the percentages are
applied to are specified in the Source and Target Percentage Overhead Component
window. When cost rollup is run, all the items specified for rollup belonging to the
specified overhead selection entities will have the specified overhead percentage
value applied to the costs. You can enter both positive and negative Percentage
burden values. The limit for negative Percentage burden value is -100. For example,
if you enter 4% overhead value for the overhead code SHR, with Organization
ORG1 and Inventory Organization WH1. When the cost rollup process is run, all
the items belonging to the ORG1 organization and the WH1 inventory organization
will have 4% overhead cost added to their costs.
Defining Source and Target Variable Overhead Components Associations

The overhead percentage is applied to each of the defined source component class costs
and analysis codes. The result is stored in the target component class and analysis code.
In the source component class field, you can select component classes with the usage
types of material. In the target component class field, you can only select component
classes with the usage type of Overhead Detail.
The source cost component class, analysis code, and overhead code must be a unique
combination. You can map this unique component class and analysis code combination
to any target cost component class and analysis code. This flexibility lets the same
source cost component class and analysis code to be mapped to different target cost
Setting Up 2-45

component class and analysis code for different overhead codes. Similarly, different
source cost component class and analysis code can be mapped to the same target cost
component class and analysis code for different overhead codes.
When the cost rollup process is run, the system looks for any percentage overhead
record defined for any of the ingredient items. If a overhead percentage is defined, then
the system applies the overhead percentage to the cost of the source cost component
class, and analysis code combination of the ingredient item and then posts the amount
under the target cost component class and analysis code.
To define source and target variable overhead components:

1. Navigate to the Source and Target Variable Overhead Components window.
Overhead Source
2. Enter the Component Class code that identifies the cost component to be applied to
the percentage overhead. In the source component class field, select component
classes with the usage types Material, Resource, Overhead, Expense Allocation, or
Standard Cost Adjustment. Required
3. Enter the code that identifies the cost Analysis Code to be applied to the percentage
overhead.
4. Enter or select a Overhead code to be used where percentage will be applied to the
specified cost component.
Overhead Target
5. Enter the code that identifies the cost component to store the result of the
percentage overhead as it is applied to the source cost component in Component
Class. In the target component class field, you can only select component classes
with the usage type Overhead Detail. Required
6. Enter the code that identifies the cost Analysis Code to store the result of the
percentage overhead as it is applied to the source analysis code.
Defining Cost Factors

You can set up the cost factors using the Cost Factors window.
Note: Refer to the Cost Factors Setup in Oracle Purchasing User's

Guide for details.

To define cost factors:
1. Navigate to the Cost Factors page. The Cost Factors page appears displaying all of
the cost factors.
2. Click Create. The Create Cost Factor page appears.
3. Enter the code for the cost factor in the Code field. This code will appear in the
Charge Type list of values in the Shipments Workbench.
4. Select Active for the Status.
5. Enter a name for the cost factor in the Cost Factor Name field.
6. Select the basis for pricing using the Pricing Basis field. Per-Unit appears by default
for the pricing basis.
7. Enter the description for the cost factor in the Description field.
8. In the Cost Management region,

1. Select the Allocation Basis for the cost factor. Options are: Quantity, Value,
Volume, and Weight.
2. Select the Cost Component Class and Cost Analysis Code.
3. Select the Acquisition Cost Indicator as Expense to not apply the cost factor in
cost calculations or Inventory to apply the cost factor in cost calculations.
9. Click Apply.
Defining Resource Costs

Define your resources with appropriate units of measure, component classes, and cost
analysis codes. To reflect resource costs incurred during production in the product cost,
set up routings and define the amount or number of resources used. Outside
production, set up overheads to reflect the amount of resources other than the
production or ingredients used in the product; you can then include overhead costs in
the cost of producing the product.
In either case, you must first define nominal usage costs associated with the resources.
You define resource costs for a legal entity and calendar and period basis. The cost
component class assigned to the resource, and the currency associated with the
organization, are displayed on this window. Prior to defining resource costs, define the
resource code identifying the resource.
Resource cost is calculated based on the routing, operation, and overhead definition
Setting Up 2-47

setup.
Prerequisites
Define Resources
To define resource cost:

1. Navigate to the Resource Cost window.
2. Enter the Legal Entity for which you are defining the resource cost.
3. Enter the code for the Organization for which this resource cost is effective. You
can leave the organization field blank, to set up the resource cost for the Legal
Entity, or enter the organization to setup for each organization. The resource cost
setup at the organization level takes precedence over the cost setup at the legal
entity level.
4. Enter the code identifying the Resource for which you are defining costs.
5. Enter the cost Calendar for which this resource cost will be effective.
6. Enter the cost calendar Period for which this resource cost will be effective.
7. If you are displaying costs for a formula item, ingredient, or product, then the
Component Class displays the component class associated with the cost shown on
this line. This field is display only.
8. Base Currency displays the legal entity's base currency. This field is display only
Cost Details
9. Enter for which cost type this resource cost is defined in the Cost Type field.
10. Description displays the description of the cost type.
11. Enter the Nominal Cost for this resource for using it for one unit of measure. For
example, if you are defining the resource cost for a mixing machine, and its usage is
measured in hours, then enter the cost of using the resource in per unit.
12. Enter the unit of measure in which usage of this resource is measured in UOM. The
default value is the unit of measure initially defined for this resource. You can edit
the value within the same unit of measure class. You define the unit of measure for
the resource on the Resources window.
13. Status is not used currently.

Selecting Resource Cost
The Resource Cost Selection lets you select the criteria for populating the Resource Cost
List window.
To select a resource cost

1. Navigate to the Resource Costs window.
2. Select Resource Cost List from the Actions menu.
3. Enter all or part of a valid cost Calendar code for which the resource cost will be
effective.
4. Enter all or part of a valid cost calendar Period code.
5. Enter each Cost Type for this resource, along with the appropriate unit cost.
Selection Range
6. Enter the code for the From Organization for which this resource cost will be
effective.
7. Enter the code for the To Organization for which this resource cost will be effective.
8. Enter the code identifying the From Resource for which you are defining costs.
9. Enter the code identifying the To Resource for which you are defining costs.
Viewing Resource Cost List

The Resource Cost List produces a list of all resource costs, by organization. This can
aid you in determining if one or more resource costs must be modified.
To obtain a list of resource cost:
1. Navigate to the Resource Costs window.
2. Select Resource Cost List from the Actions menu.
3. Organization displays the selected organization code.
4. Resource displays the selected resource.
5. Description displays the description of the resource.
6. Cost displays the cost of the resource.
7. Unit Of Measure display the initial unit of measure for the resource.
Setting Up 2-49

Defining Fixed Overheads
Use the Fixed Overheads window to set up and maintain overheads. A overhead is a
cost associated with a resource other than the resource usage assigned in the routing.
Assume you need a laborer to clean MIXER1 after each use. To account for the cost of
cleanup, instead of adding another component cost to each item that uses MIXER1, you
can assign a overhead to the items being produced by that laborer on MIXER1. The
overhead assignment would be the time it takes the laborer to clean MIXER1 multiplied
by the cost per hour for the laborer. In addition, you can add other costs into the
overhead (for such things as cleaning agents).
To reflect overheads in the cost of a product or an ingredient, first create the overhead
using this window. In order to assign overheads to resources, you must first set up a
resource to be used as the overhead. As in the example above, this would be the
MIXER1 resource. You must then define a cost for that resource. Then, when assigning
overheads, you will assign the amount of that resource needed to perform the
overhead. As in the example above, you may need to use .25 hours of MIXER1 for
cleanup.
The following fields are required on the Fixed Overhead window and must be set up
prior to defining overheads. The application where each field is set up is shown in
parentheses:
• Item (Oracle Inventory)
• Inventory Organization (Oracle Inventory)
• Calendar/Period
• Cost Type
• Resource (OPM Process Planning)
• Cost Analysis Code
Note: You cannot add new cost overhead information for a period
that is closed.
To define fixed overheads:

1. Navigate to the Fixed Overheads window.
2. Enter the Item code for the product or intermediate to which this overhead is

assigned. For example, if the product Blue Paint uses MIXER1 as a resource, and
you assign a overhead for cleanup of MIXER1 to the process for making Blue Paint,
then enter the item code for blue paint.
3. Enter a valid Calendar code. The overhead only applies to this item when
associated with this calendar.
4. Enter a valid Period code within this calendar. The overhead will only apply to this
item when associated with this calendar/period.
Note: Overhead details in a closed period can only be viewed and

cannot be edited.
5. The Cost Type for the specified calendar displays.
6. Base Currency Code displays the base currency of the legal entity. This field is for
display only.
Overhead Details
7. Enter the code for the Resource overhead. For example, if the product Blue Paint
uses MIXER1 as a resource, and you assign a overhead for cleanup after each use of
MIXER1, then enter the code for MIXER1.
8. Enter Component Class Code you defined as overhead usage for this resource.
9. Enter the Analysis Code under which this overhead appears in cost details.
10. Enter the number of this resource used in the production of the item inResource
Count. For example, if it takes one laborer to cleanup MIXER1 after each use, then
enter 1 (laborer). This number is multiplied by the Resource Usage to calculate the
total resource usage.
11. Enter the amount of the resource used for this overhead in Resource Usage. For
example, if it takes one laborer .25 hours to cleanup MIXER1 after each use, then
enter .25.
12. Enter the unit of measure in which this resource is yielded in Resource UOM.
13. Enter the amount of the item yielded in this production process (the item entered in
the Item field) during that .25 hours of resource usage in Item Quantity.
14. Enter the unit of measure in which this overhead is measured (for example,
pounds) in Item Unit of Measure.
Setting Up 2-51

3
Using Standard Costing
This topic describes how to define and use standard costs for production items. These
costs include raw materials, overheads, and other costs associated with production.
Once defined, you can propagate those costs for use by other organizations within your
legal entity and determine the appropriate costs to use for accounting.
Individual ingredient and resource costs must be rolled-up to reflect the total standard
cost of the item that is produced. This procedure is detailed in the Standard Cost Rollup
discussion.
• Requirements
• Understanding Standard Cost
• Factors Affecting Standard Costs
• Defining Standard Item Costs
• Defining Recipe, Routings, and Formulas
• Defining Resources and Resource Costs
• Defining Rollup Source Organizations
• Running Standard Cost Rollup
• Cost Rollup Error Messages
• Viewing Standard Costs
• Viewing Overhead Details
• Viewing Routing Costs
• Viewing Formula Costs
• Viewing Item Costs
• Item Cost List Window
Using Standard Costing 3-1

Requirements
Can I maintain cost formulas and routings?

Yes. You can create cost formulas and routings. These are by the Cost Rollup process to
calculate costs. Create a cost formula and routing by copying the production formula
and routing and giving it a different name or version.
Maintaining Cost Formulas and Routings
During production, you can adjust ingredients, products, or byproducts in the formulas
or adjust the routing parameters. These adjustments are made to reflect the production
changes in the plant. You can retain the product costs based on the standard
proportions in the formula and the standard usage data in the routing that were
determined at the beginning of the month or the year.
You can create the cost formulas and routings. Create a cost formula by copying the
production formula and giving it a different name or version. If you use routings, then
create a copy of the routing that is used for production. Create a recipe and associate the
new formula version and routing version to that recipe. Lastly, create a validity rule as
the Costing Use validity rule.
After the cost is calculated and finalized, freeze the cost along with the associated
formula and routing to maintain a complete audit trail. If only one formula and routing
are used, then the formula cannot be modified for production. Only cost formulas and
routings are frozen, if they were used. You can adjust the production formulas and
routings. The Cost Rollup process considers the Costing Use recipe first over the
production recipes. You do not need to set up a costing recipe in addition to the
production recipe for all products.
If required, set up only one Costing Use recipe for a product or for a set of products. Set
the GMF: Use Only Costing Validity Rules for Cost Rollup profile value to Yes, so that
the Cost Rollup process considers only the costing use recipes.
Is the Standard Quantity on the Recipe Validity Rules window used in the Cost Rollup
process?
Yes. The Cost Rollup process uses the Standard Quantity specified on the Recipe
Validity Rules Details window to determine ingredient and product proportions for
cost calculation.
Using the Standard Quantity on the Recipe Validity Rules window in the Cost
Rollup process
The Cost Rollup process uses the Standard Quantity specified on the Recipe Validity
Rules window to determine ingredient and product proportions for cost calculation.
If the formula product quantity does not match the standard quantity for a product,
then the formula is scaled to the standard quantity and then the rollup calculations are

performed. The standard quantity represents the standard or the unit size of the
product used for cost calculations. Therefore, set up the standard quantity correctly; it
cannot be zero. If the standard quantity is zero, then scaling is not performed and the
Cost Rollup process displays errors.
Can I specify multiple validity rules for a product? Which validity rule does the Cost
Rollup process choose?
Yes. You can specify multiple validity rules for a product. The Cost Rollup process
selects the most appropriate validity rule as described in the subsequent paragraphs.
Multiple Validity Rules
The Cost Rollup process selects the most appropriate validity rule using the following
criteria:
• Costing Use and Production Use recipes are selected.
• Validity rules status is either Approved for General Use or Frozen. If the Lab Cost
Method is used, then the Lab Recipes and validity rules are also selected.
• The validity rule start and end dates must include the entire costing period.
The validity rules are further analyzed for an item as follows:

• If the Cost Rollup is run for a Lab Cost Method, then the validity rule with the Lab
Use status is selected over other statuses.
• Costing validity rules are selected over production validity rules
• Any organization-specific validity rules are considered. If such validity rules do not
exist, then the global validity rules (with Organization field blank) are selected.
• A validity rule with a lower preference number is selected over a validity rule with
a higher preference number, that is, the lower the preference number the better it is.
If all of the above criteria match, then the most recently created validity rule is selected.
Are resource scale types considered in resource cost calculations?

Yes. In Standard Cost Rollup, the resource costs are calculated from the Routing, Step,
and Operations. The resource cost calculation depends on the resource scale type set up
at each operation level.
Resource Cost Calculations
In Standard Cost Rollup, the resource costs are calculated from the Routing, Step, and
Operations. The resource cost calculation depends on the resource scale type set up at
each operation level.
The resource scale types are:

• Linear
• Fixed
• Fixed by charge
The resource cost calculations for the three scale types are as follows:
Linear Scaling
Resource Unit Cost = (1 / Standard Qty) * [(Total Output Qty / Routing Qty) * (Step
Quantity / Process Quantity)] * Resource Count * Resource Usage * Resource Nominal
Cost * Activity Factor
Fixed Quantity
Resource Unit Cost = (1/Standard Qty) * [1] * Resource Count * Resource Usage *
Resource Nominal Cost * Activity Factor
Fixed By Charge
Resource Unit Cost = (1/Standard Qty) * [Number of Charges] * Resource Count *
Resource Usage * Resource Nominal Cost * Activity Factor
Does cost rollup consider overrides at the validity rule level?

The Cost Rollup process considers all the overrides at the validity rule level in the cost
calculations.
Overrides of various parameters at the validity rule level
The Cost Rollup process considers all the overrides at the validity rule level in the cost
calculations. The process loss and step quantities can be overridden at the validity rule
level. These are preferred over the values set up in the routing and operations.
Does standard cost handle byproducts in Cost Rollup?

Yes. The byproduct costs are either added or subtracted from the total ingredient and
resource cost to calculate the final cost of products.
Handling byproducts in Cost Rollup
The byproduct costs are either added or subtracted from the total ingredient and
resource cost to calculate the final cost of products. If a byproduct is sold, then set a cost
for the byproduct, so that it reduces the total cost of the product. If you spend money to
dispose off the byproduct, then enter a negative cost for it and it increases the product
proportionately to reflect this affect.
Why Expense Allocation Variance (ALV) accounting entries are created, if the product
uses standard cost?
Expense Allocation Variance (ALV) entries get created during batch closure, if the

product uses standard cost and if one of the Cost component class of the
product/ingredient costs is GL Expense Allocation.
The OPM Financials application currently does not allow the setup of GL Expense
Allocations for Standard Costing. The only possibility by which it can be present as the
cost component is through Copy Cost Function. If you copy the Actual Cost with GL
Expense Component Class to Standard Cost Method, this cost component is visible at
This Level Cost. Once expense component class is present in the cost of an item (in a
batch) then batch close event can generate ALV variance, if there is a difference in the
actual quantity on the batch compared to planned quantity of the costing formula. ALV
is computed by multiplying GL Expense Component Cost with the difference between
actual quantity on the batch and the planned quantity on the formula (after scaling).
Understanding Standard Cost

The standard cost of a product depends on the combination of:
• Ingredients that are defined in formulas
• Resources that are defined in routings
• Overheads from facilities where the product is produced
Any applicable overrides that are identified at the recipe level for the formula and
routing combination.
Standard costs are predefined costs that are set up for ingredients and resources and are
calculated for products based on formulas, routings, and overheads. Define the cost of
ingredients in a specific organization for a cost period. This cost information remains
static during a cost period.
Factors Affecting Standard Costs

The factors affecting standard cost of product are:
Recipes
Recipes contain the minimum set of information that uniquely defines the
manufacturing requirements for a specific product. Recipes provide a way to describe
products and how those products are produced. A recipe entity standardizes the
structure of all information that defines the production of one or more products.
Recipes have:
• Formulas that define the composition of materials (products, ingredients, and
byproducts).
• Routings that reflect the production processes (labor and equipment operations

with activities and their associated resources). Routings are optional.
• Process Instructions that indicate additional information for production.
To provide flexibility, formulas and routings are built independently. They are linked
using a recipe that has validity rules. Multiple formulas can use the same routing. One
formula can be associated to several different routings.
Validity Rules
Validity rules specify the circumstances under which the recipe can be used. One or
more validity rules can be associated with each recipe. A validity rule determines when,
where, and under what circumstances a recipe can be used to create a batch, to plan
with, or base standard costs upon. Validity rules also determine which plant (inventory
organization) the recipe is valid for. Thus, recipe validity rules let you specify under
which condition and for what purpose (production, planning, costing, regulatory, or
technical) a particular recipe can be used in order to maximize raw materials and
leverage their inherent variability.
Validity rules provide a combination of material quantities and a range of effective
dates used by production and planning in one or more specified organizations.
The Validity Rule hierarchy lets the application to use most recently created rule instead
of the most recently updated rule.
In the OPM Product Development application, recipe validity rules are entered with the
appropriate recipe use data. A Validity Rule indicates the type of a Recipe (used for
Production or Costing or Planning), the effective start and end dates between which a
particular Recipe can be used, the Min and Max quantities of production that can be
done using the Recipe, a preference to indicate which Recipe is preferred among
multiple valid Recipes and a status. The Cost Rollup process considers recipes that are
set up for costing and production. Recipes, validity rules, formulas, routings, and
operations all have a new status attribute. The Cost Rollup process selects statuses that
fall within the following categories: Approved for Lab Use (only for Lab Cost Rollups
that are run for a Lab Cost Type), Approved for General Use, and Frozen. The Cost
Rollup process determines whether to use a lab recipe based on the specified cost type
for which the cost rollup is run. This process takes precedence over the other recipes
during a Lab Cost Rollup. Refer to the Oracle Process Manufacturing Product Development
User's Guide for details on formulas and recipes. Refer to the "Defining Cost Types"
topic.
Using Lab Recipes for Simulations
The Usage type for a cost type lets you indicate if the cost type is identified for the lab
use. The default value is general use which when selected considers only the
production and costing recipes. If the usage field is set to Lab use, then the Cost Rollup
process uses the lab recipes along with the product or costing recipes and lab use takes
precedence over other recipes.
To create a new recipe, you can specify product code and quantity, or formula number
and version. You can also specify a routing in the recipe. You can override routing

attributes such as Capacity, Activity Factor, Charges, and Resource Usage for each
recipe you define. If a recipe is set up for Automatic Step Quantity Calculation, then
ensure that the formula material is properly associated to each appropriate routing step.
Formulas and Routings

Formulas are lists of ingredients and products with their associated quantities.
Production batches are based on formulas defined in Product Development. Formulas
are also used for planning, managing costs, and regulatory compliance.
Routings are defined in terms of operations. You enter and maintain the sequence of
operations and step quantities used in a routing. You define multiple versions for a
routing that makes the same product to accommodate for several production lines with
differing characteristics. Since routings and operations are modeled into the structure of
a new recipe, several attributes are defined at the recipe level, including planned
process loss, step quantity, capacity, and activity factor.
Since a single product can be associated with several routings on the manufacturing
floor, it can have different costs depending on the specified routing. Product
Development tracks the route that the ingredients follow, thereby tracking appropriate
costs.
Material Scaling
You can scale formulas up or down by input or by output:
• If the formula input ingredients are scaled, a specific scaling factor is applied to all
scalable ingredients. A calculated output scale factor is applied to all scalable
outputs
• If the formula outputs are scaled, a factor is applied to all scalable outputs. A
calculated input scale factor is applied to all scalable ingredients.
In order for this approach to be successful, you need to specify whether the quantities of
each item in the formula are fixed or scalable. Proportional scaling is the least complex
scaling type since the given and calculated factors are applied appropriately to the
scalable item inputs or outputs. In order to scale formulas properly, specify whether the
ingredients need to be increased using fixed or proportional scaling.
The following lists the types of formula scaling available in Product Development:
• Type 0 is Fixed scaling.
• Type 1 is Proportional scaling.
• Type 2 is Integer scaling.
The following lists the Contribute to Yield types available in Product Development:

• Yes indicates that an ingredient contributes to yield.
• No indicates that an ingredient does not contribute to yield.
Process Loss
The Cost Rollup process considers the process losses defined. A process loss is a
percentage established at the recipe level to indicate any loss of materials that occur
during the various stages of routing. The Cost Rollup takes the process loss value
defined at the Plant/Lab level and the validity rules level. The values for the process
loss, if defined at the validity rule level will take precedence. Cost Rollup does not take
into account the value defined at the Recipe Header level. The loss percentage is used to
calculate the actual ingredient consumptions, and thus affects the material and resource
unit costs rolled up to the product. Refer to the Oracle Process Manufacturing Product
Development User's Guide for more details on process loss overrides.
All linearly scaled ingredients are increased by:
Ingredient Quantity / [1 - (Process Loss / 100)]
Activity Factors and Charges

The activity factor indicates the number of times an activity is performed. The factors
are applied to resource usage when calculating resource costs.
Charges are determined by capacity and relates to the number of times a routing step or
an activity needs to be performed. This is specific to a recipe. The OPM Product
Development application includes a new resource scaling type, Fixed by Charge. This
scaling type determines if the resource cost is fixed by the number of charges. The Cost
Rollup process considers the new scaling type and computes the costs accordingly.
Refer to the Oracle Process Manufacturing Product Development User's Guide for details on
the Fixed by Charge scaling type.
The Cost Rollup process uses the fixed quantity scale type in the cost calculations.
• Fixed Quantity
The resource cost using the Fixed quantity scaling type is calculated as:
Resource Unit cost = (1/Product Yield Qty) * [1] x Resource Count * Resource Usage
* Nominal Cost * Activity Factor
• Linear Scaling
The resource cost using the Linear Scaling type is calculated as:
Resource Unit Cost = (1 / Standard Qty) * [(Total Output Qty / Routing Qty) * (Step
Quantity / Process Quantity)] * Resource Count * Resource Usage * Resource
Nominal Cost * Activity Factor

• Fixed By Charge
The resource cost using the Fixed by Charge scaling type is calculated as:
Resource Unit cost = (1/Product Yield Qty) *[Number of Charges] * Resource Count
* Resource Usage * Nominal Cost x Activity Factor
Resource Cost Calculation

The OPM Product Development application provides the flexibility to override the
operation throughput, process quantity, and resource usage at the recipe level. The Cost
Rollup process supports these overrides. The Resource Usage is calculated based on the
total output rather than the product itself. Refer to the Oracle Process Manufacturing
Process Execution User's Guide for more details on the resource usage.
Validity Rule Overrides

You can now override the planned process loss at the validity rule level. The planned
process loss value is taken from the validity rule, if available. Otherwise, it is calculated
from the recipe along with the theoretical loss table for the validity rule standard
quantity. The Cost Rollup process considers the planned process loss override and uses
them cost calculation.
Support for Item Substitutions

A plant can modify its formulas to achieve certain product specifications such as
replacement of its items. These substitutions are based on a prescribed list of alternative
item replacements with usage controlled by defined start and end dates.
• The list of items including the substitute items that were used to calculate the
product cost display in the Formula Details window from the Item Costs window.
• The profile option, GMF: Use Substitute Items in Standard Costing, lets you specify
whether the Cost Rollup process must use the original formula item or the most
appropriate substitution item based on the costing period start date or end date.
• The Cost Rollup process considers the substitute item for the product cost
calculation based on the specified effective date using the profile option.
This profile option lets you specify whether to use the original formula item or the
substitute item in the product cost calculations. This profile option has the following
values:
• No
Uses the original item for cost calculations. This is the default value.
• Yes, use period start date as effective date

Uses the substitute item. The most appropriate substitute item is determined using
the costing period start date as the effective date. The costing period start date must
be within the item substitution's effective start and end date as set up in the OPM
Product Development application.
• Yes, use period end date as effective date

Uses the substitute item. The most appropriate substitute item is determined using
the costing period end date as the effective date. The costing period end date must
be within the item substitution's effective start and end date as set up in the OPM
Product Development application.
This profile is available at the Site, Responsibility, and Application levels.

When the substitute item option is selected for calculating costs, the Cost Rollup process
uses the costing period start date or end date to derive the most appropriate substitute
item based on the selected profile value.
The substitute item inherits the scaling attributes of the original item (the replaced
item). If the original item is integer scaled, then the scale multiple is converted to the
appropriate unit of measure.
The substitute item quantity is calculated by multiplying the original item quantity in
the primary unit of measure by the replacement ratio. The replacement ratio is
calculated by dividing the replacement quantity by the original item quantity.
Refer to Oracle Process Manufacturing Product Development User's Guide for more details
on setting up and using item substitutions.
Defining Standard Item Costs

Use the Item Costs window to define the cost for ingredients or inquire the cost of
producing a product or intermediate. The cost is based on the following parameters:
• Item
• Inventory organization
• Cost calendar and period
• Cost type
The derived cost is per unit of the item being costed. For example, if you are costing the
product Blue Paint, which has an inventory unit of measure as gallons, the cost entered
or calculated is that to produce one gallon of blue paint.
The cost entered or calculated is shown in one unit of item's unit of measure. The total
cost to produce the item is shown in the Item Costs window. A breakdown of costs is
shown in two tables located in the lower portion of the window. Costs are broken into
two levels. All costs carried over from previous levels of production are shown as

Lower Level costs. All costs added at the current level of production are shown as This
Level costs. A total cost for each level is shown at the top of each breakdown.
Each cost is associated with the component class assigned to the item, ingredient, or
resource used. If more than one item with the same component class and analysis code
is used at the same level in the production process, the cost for each of those items is
summed and listed under on the same line.
Purchased raw materials are entered only in the This Level. Produced items can have
item costs in both levels. The Lower Level summarizes costs from all intermediates
regardless of the number of levels.
Prerequisites
The following information is required on the Item Costs window, and must be set up
prior to using this window. The application where each field is set up is shown in
parentheses if they are set up in other applications:
• Cost Types
• Cost Calendars and Periods
• Inventory Organization(Oracle Inventory)
• ComponentClasses
• AnalysisCodes
To define item costs:

1. Navigate to the Item Costs window.
2. Enter the Item for which you are entering or inquiring costs.
3. Enter a valid Calendar code.
4. Enter a valid Period code within this calendar.
Note: You can enter costs only for open periods. You can add but
you cannot make changes to item costs in a period that has been
frozen through a successful final cost update process. Also, you
cannot add new costs or update costs in a period that has been
closed.
5. Enter a valid Cost Type code. Only standard cost types are available.
6. Indicate whether the costs are Frozen or not. You cannot edit this field.

7. Total Cost displays the item's total cost in the legal entity currency in the item's
primary unit of measure.
This Level
8. This Level Cost displays the sum of this level costs cost component values.
9. Usage Type indicates the classification of the component class associated with the
cost for that line. Usage type has one of the following values:
• Material
• Resource
• Overhead
• Expense Allocation

While entering standard costs, only cost component classes of usage type
Material or Standard Cost Adjustment can be entered.
First, select the usage type and then only select a cost component to enter the
costs.
10. Enter a Component Class Code.
11. Description displays the description of the Component Class Code.
12. Enter an Analysis Code.
13. Enter the cost of each component in Component Cost.
14. Cost Origin displays the origin of the cost data. Indicates if the cost is calculated or
derived using one of the following methods:
• Carried over from the previous period by actual costs
• Copied using the Copy Cost process
• Loaded through the Costing APIs
• Merged lower level costs with this level costs during the Copy Cost process
Lower Level
The meaning of the fields are the same as that in the This Level but the costs are
shown for display only. Lower Level costs cannot be entered directly. Cost Rollup
calculates costs for products and the material costs from formulas are shown at the

lower level.
Note: Two level display is available for Actual Cost method.

Similar to Standard Cost, Actual Item Cost is displayed as This
level and Lower Level Costs.
Item Costs Window Menu Features - Actions Menu

• Overhead Details - The window displays the overhead costs that have been
included for the item shown on the Item Costs window.
• Formula Details - Use this window to display the recipe and formula ingredient
cost for each item displayed on the Item Costs window.
• Routing Details - Use this window to display the cost of resources used in
routings and operations in your formulas. The Cost Rollup process rolls up the
cost of the resources used in the operations and routings into the end-product
cost, which can then be viewed using this window.
• Item Cost List - Use this window to display item costs for a particular cost
calendar, period, and cost type. You can display costs for all, one, or a range of
items or item classes for a particular calendar, period, and cost type.
• Actual Transaction View - View transactions in a costing period used to

calculate actual costs. You can also view actual cost transactions from the
previous period. This option is applicable only to Actual Cost.
Defining Recipe, Routings, and Formulas

You define recipe, routings, and formulas in the OPM Product Development
application. Refer to the Oracle Process Manufacturing Product Development User's Guide
for more details.
Defining Resources and Resource Costs

You define resources in OPM Process Planning. Refer to Oracle Process Manufacturing
Process Planning User's Guide for more details.
Refer to "Costing Setup" topic for more details on defining resource costs.
Defining Rollup Source Organizations

When calculating costs using Cost Rollup, use the item costs from different
organizations to reflect how the ingredients are sourced from the organizations for
production. Indicate the cost from each organization to arrive at a final cost to produce

the end product.
For example, if you normally pull a particular item from a single organization, you
indicate that 100% of the cost for the item should be costed from that organization. If
however, half of the time you draw the items from one organization, and the other half
of the time you draw from a different organization, you can indicate to use 50% of the
cost defined from each organization. Another example could be that you have an
organization within 50 miles of the distributor of one of your raw materials. Due to the
proximity of the organization, the shipping costs, the cost of the raw material from that
organization would be significantly less than in another organization located 2,000
miles away from the distributor.
Note: The cost rollup requires a default rule by organization, calendar,

and period. This record shows blank in the Cost Category and Item
fields indicating that it is not specific to any item or cost category but
rather applies to all items for which a specific sourcing rule is not set
up.
Applying Burdens for the Ingredient Item to the Item Cost in a Target Organization
The profile option GMF: Compute Ingredient Cost in Target Organization Based on
Sourcing Rules determines creation of ingredient Item Cost Records in target
organization if there is no pre-existing Item Cost in target organization based on source
rule setup. The costs created in target organizations are used for computation in
Product Cost calculation.
If Percentage burdens are defined in source Organization and value for the profile
option GMF: Compute Ingredient Cost in Target Organization Based on Sourcing Rules
is set to Yes, then the percentage burdens are applied in the target organization. If
Percentage burdens are defined in both source and target organizations, then burdens
defined in source organization overrides the burdens defined in the target organization
as long as the profile value is set to Yes.
Item cost in source organization is used to create Item cost for ingredients in Target
Organization. Item Cost in Source organization for this purpose includes burdens,
resource cost, overheads and material cost. The byproduct costs are created in Target
Organization based on the cost in the Source Organization, provided the byproduct is
an ingredient in a downstream or upstream transaction in target organization.
Ingredient Item Cost creation in target organization is dependent on profile value being
set to Yes, Item assignment to target organization, Recipe Validity Rule for the target
organization, and existing Item Cost in target organization. When item transferred is
not ingredient based on any Recipe or Formula applicable in target organization, the
Item cost is not created based on source rule. Ingredient added at Batch Level shall not
be sued for creation of cost using Sourcing Rule. Ingredient Item Cost are created based
on Primary UOM of Item in target organization.

To define rollup source organization:
1. Navigate to the Rollup Source Organizations window.
2. Displays the Legal Entity for which you are defining the resource cost.
3. Displays the Organization for which you are defining source inventory
organization cost allocations.
4. Enter the cost Calendar for which you are defining source inventory organization
cost allocations.
5. Enter the Period for which you are defining source organization cost allocations.
6. If you are defining source organization cost allocations for all items assigned to a
particular item Cost Category, then enter the cost category. Otherwise, leave it
blank and enter the item to define source organization cost allocations by item.
7. If you are defining source organization cost allocations for one Item, then enter the
item code. Leave it blank, if you are entering the Cost Category.
Cost categories are associated with items on the Items window in Oracle Inventory.
Source Organizations
8. Enter the code for the Inventory Organization from which you are sourcing raw
material costs.
9. The organization Description displays automatically.
10. Enter the Allocation % to be used from this organization. The allocation percentage
must add up to 100, otherwise you cannot save the record.
Running Standard Cost Rollup

Describes the Cost Rollup process.
Prerequisites
Set up the following prior to running the cost rollup:
• Recipes
• Formulas
• Operations
• Routings

• Validity rules for costing or production
• Raw material cost
• Resources
• Resource cost
• Overheads
• Percentage overheads
• Lab recipes and validity rules if running a lob cost rollup
To run the standard cost rollup:

1. Navigate to the Cost Rollup window.
2. Select Start from the Cost Rollup window Actions menu. The Start Cost Rollup
window displays. You can begin the rollup for a specified calendar, period, and cost
type.
Selection Criteria
3. Enter the Legal Entity linked to the calendar. Transactions for all organizations
linked to this legal entity are selected and included in the Cost Rollup process.
4. Enter the code for the Calendar for which the cost rollup will be processed. Costs
are rolled up for the legal entity and the cost type linked to this calendar. Required.
5. Enter the Period for which costs will be rolled up; this period defines the start and
end dates for selecting all validity rules. This period in the cost calendar must be
either open or frozen (a closed period cannot be entered). Required.
6. Period Status is the status of the calendar period (either Never Opened, Open,
Closed, or Frozen) displays. You cannot edit this field.
7. The cost type linked to the cost calendar displays in Cost Type. Only standard cost
types are allowed.
8. Click Single Level, if a single level rollup is to be performed for the item to be
entered.
9. Enter a range of Inventory Organization (From and To) to run the cost rollup
process. For running the cost rollup for a single inventory organization, enter the
same value in the From and To. To run the cost rollup for all inventory
organizations, leave the inventory organization From and To blank. For open ended
range, if you specify From inventory organization and leave the To blank, then the

cost rollup considers inventory organizations starting from the specified From
value and beyond. Similarly, if you specify to inventory organization and leave the
From blank, then the cost rollup considers inventory organizations up to the To
value.
10. Enter a range of Cost Category From and To by entering the opening and closing
ends of the cost category number range respectively. For a single item or item cost
category, enter the same value in From and To.
11. You can include component costs for a range of items Item From and To by entering
the opening and closing ends of the item number range respectively. For a single
item or cost category, enter the same value in From and To.
12. Enter a range of items for which to run the cost rollup in Item List.
Start Cost Rollup Fields

13. Enter the Start Date and time that the cost rollup process must start. Click Now to
start the process immediately.
To start the rollup at a particular date, click the Specific Date radio button. Enter the
date you want the cost rollup to run.
14. OPM assigns a unique identifier number for each individual cost rollup process in
Rollup Reference Number. You cannot edit this entry.
Cost Rollup window - Additional Menu Features - Actions Menu
Start - Displays the Start Cost Rollup window that lets begin the rollup for a
specified calendar, period, and cost type.
Process Status - Use this option to review the status of a cost rollup that is in
progress. You can also review figures from previous processes, each of which is
identified by the reference number. The reference number lookup is available to
help you in selecting previous rollups for query.
Abort/Reset - Use this option to abort the cost rollup process that is running
currently. For situations where a process was terminated unintentionally, this
option also resets the internal controls and settings required to start the rollup
process again.
An Aborted Reason field is provided to capture appropriate text.
View Error Messages - Use this option to review any errors generated during a cost
rollup processing run. The Cost Rollup Error Messages window is shown. Each
generated error is listed on an individual, OPM-generated line. The error itself is
explained under the Error Comment heading.
Note: The first message line is not an error, but a summary of the
parameters or options selected to start the rollup.

Cost Rollup Error Messages
Describes the Cost Rollup error messages.
1. Cost Rollup Reference Number OPM assigns a unique identifier number for each
individual cost rollup process. You cannot edit this entry.
2. Line displays the line number of the error message.
3. Error Message displays the text of the error message.
Viewing Standard Costs

The Viewing Standard Costs discussion describes how to view standard costs once they
have been calculated. You can view standard costs for items, formula ingredients, cost
overheads, and routings.
You access all of these view cost options from the Item Costs window. Complete the
Item Costs window in order to display cost details. Once the Item Costs window is
complete, follow these procedures to display item, ingredient, overhead, or routing
costs.
Viewing Overhead Details

The Fixed Overheads window displays overhead details for an item as calculated by the
Cost Rollup process.
The cost displayed shows the contribution that overheads make to the total unit cost.
Overhead details are entered on the Fixed Overheads window.
To view the fixed overhead:

2. Query and retrieve the cost details of the product.
3. Select Overhead Details from the Actions menu.
4. Item displays the item for which cost overheads are being displayed. The Item is
retrieved from the Item Costs window.
Overhead Details
5. Inventory Organization displays the inventory organization associated with this
item, for which costs are displayed.

6. Resource displays the resource for which the overhead is assigned.
7. Component Class Code displays the component class associated with this resource,
and used for the overhead cost calculation. Component classes are associated with
overheads on the Fixed Overheads window.
8. Analysis Code displays the analysis code associated with this resource and used for
the overhead cost calculation. Component classes are associated with overheads on
the Fixed Overhead window.
9. Overhead Cost displays the calculated overhead cost. The cost equals the resource
cost multiplied by the quantity of the resource used for this overhead, divided by
the item quantity and the resource quantity. These figures are entered on the Fixed
Overheads window.
For example, if you specified LABOR at $5.00 per hour as the overhead resource,
and the overhead quantity is .25 hours, this field equals .25 multiplied by 5.00, or
$1.25.
Viewing Routing Costs

For standard cost this window displays the cost of resources used in routings in the
production of items or intermediate items. If you use operations and routings in your
formulas, the Cost Rollup process rolls up the cost of resources used in operations and
routings into the end-product cost.
For each resource, the component class, analysis code, and the component cost from the
resource is listed.
To view the routing cost:

3. Select Routing Costs from the Item Costs window Actions menu.
4. Item displays the item for which routing costs are shown.
5. Quantity displays the process amount for the resource with Quantity UOM as its
unit of measure.
6. Routing Number displays the routing code associated with the highlighted routing
line for which costs are shown.
7. Routing Version displays the routing version associated with the routing for which
costs are shown.

8. Recipe Number displays the recipe code.
9. Recipe Version displays the version associated with the recipe.
10. Resource displays the resource used for this routing.
11. Component Class Code displays the cost component class used to cost this
resource. The corresponding component class description displays automatically.
12. Analysis Code displays the analysis code for the component class.
13. Component Cost displays the cost associated with this resource (cost to produce
one unit of this product). For example, if this routing is assigned to the production
of Blue Paint, and the unit of measure for Blue Paint is gallons, the cost shown is
that to produce one gallon of Blue Paint.
14. Resource Usage displays the rate of use for the resource.
15. Resource Count displays the number of resources used.
16. UOM displays the primary Unit of Measure for the item.
Viewing Formula Costs

Use the Formula Costs window to display the formula ingredient cost for an item. The
sum of the ingredient components in a formula should be equal to the product
component cost on the Item Costs window.
If more than one ingredient with the same cost component class is used in the
production for the item, the cost for each of those items is summarized and shown as
one line on the Item Costs window. The Formula Detail window breaks the items down
and shows each of them individually.
The item cost component class and analysis code used to cost the item are displayed for
each ingredient in the formula. In addition, the component cost associated with each
item is also displayed.
To view formula costs:

3. Select Formula Costs from the Item Costs window Actions menu.
4. Item displays the formula item and for which costs are shown.
5. Formula displays the formula name used to produce this formula item.

6. Formula Version displays the formula version.
7. Recipe displays the recipe name used to rollup the product cost.
8. Recipe Version displays the recipe version.
Formula Details
9. Ingredient displays the ingredient for which costs are shown.
10. Component Class Code displays the component class associated with this formula,
used to calculate the formula ingredient costs.
11. Analysis Code displays the cost analysis code associated with this formula, used to
calculate the formula ingredient costs.
12. Component Costdisplays the formula item (ingredient) for which the costing details
on this line are displayed.
The item cost component class and analysis code used to cost this item are
displayed. In addition, the component cost associated with the item is also
displayed.
13. UOM displays the primary Unit of Measure for the item.
Viewing Item Costs

Use this window to display item costs for a particular cost calendar, period, and cost
type. You can display costs for all, one, or a range of items or cost categories for a
particular calendar, period, and cost type.
To display item costs:

2. Select Item Cost List from the Actions menu. The Item Cost Selection window
displays.
3. Enter the cost Calendar for which you want to display item costs. Required.
4. Enter the cost calendar period for which you want to display item costs in the
Period field. Required.
5. Enter the cost type code for which you want to display item costs in the Cost Type
field.

Selection Range
6. To display item costs for a range of item cost categories, then enter the first item
and last item cost category in the range (alpha-numerically) in Item Cost Category
(From, To).
7. To display costs for a range of items, then enter the first item and the last item in the
range (alpha-numerically) in Item (From, To).
Select Accept . The Item Cost List window displays.
Item Cost List Window

1. Item displays the item for which costs (on this line) are shown.
2. Unit of Measure displays the unit of measure for which costs are shown. The cost
shown is for one unit of this item.
3. Organization displays the organization, in which this item is stored, for which costs
are shown.
4. Cost displays the nominal cost for this item, in this inventory organization.
5. Description displays the description of this item.

4
Using Actual Costing
This topic describes how to setup and use actual cost.

• Requirements
• Understanding Actual Costing
• Actual Cost Calculation Methods
• Describing Transactions in Actual Costs
• Calculating PMAC Cost with Circular References
• Setting Up Expense Allocations
• Defining Allocation Codes
• Defining Allocation Basis
• Defining Expenses to Allocate
• Using Material Cost Component Classes
• Defining Adjustment Reason Codes
• Processing Cost Allocations
• Running the Actual Cost Process
• Viewing the Actual Cost Process
• Viewing Actual Cost Error Messages
• Aborting or Resetting the Actual Cost Process
• Viewing Actual Cost Transactions
• Viewing Item Cost List
• Item Cost List Window
• Viewing Overhead Details
• Viewing Routing Costs
Using Actual Costing 4-1

• Using Actual Cost Adjustments
• Zero Activity/Quantity Adjustments in Actual Costing
Requirements
Can I enter initial costs when using actual cost?

No. Because actual costs are calculated, you cannot enter cost data using the Cost
Details window.
Entering initial costs when using the Actual Cost Method
Actual costs cannot be entered manually using the Cost Details window. To enter costs
for the first period for Actual Costs, use the Item Cost API to load the costs. Source the
first period costs from an external application or legacy systems.
How can inventory be easily reconciled under actual costs?

There are a few recommendations for easier inventory reconciliation in Actual Costing
is provided in the subsequent paragraphs.
Recommendations for easier inventory reconciliation under Actual Costs If the Period
Moving Average (PMAC) method is used for Actual Costs, then set the Purchase Price
Variance to Book Inventory at PO Price on the Event Fiscal Policy window. PPV is not
recorded and the Cost Revaluation is not needed. For the batch accounting entries, map
the CLS account to inventory, so that finished goods inventory balance in subledger is
in synchrony with the inventory valuation.
If the Period Weighted Average (PWAC) method is used for Actual Costs, then set the
Purchase Price Variance to Book Inventory at Item Cost on the Event Fiscal Policy
window. PPV is recorded against each receipt but the net affect is zero at the end of the
period because of averaging. Run the Cost Revaluation process to accurately reconcile
the inventory at the end of the period.
Does actual cost support invoice override of receipts?

Yes. Actual cost uses the invoice price, if available, and the invoice price is preferred
over the PO price in cost calculations.
Invoice override of receipts
Actual cost uses the invoice price, if available, and the invoice price is preferred over the
PO price in cost calculations. For the matching to work correctly, it is recommended
that you match the invoice to a receipt (three-way match) instead of to a PO (2-way
matching). If the invoice is matched to a PO, then the invoice price overrides all the
receipts for the PO line, though the invoice is for one receipt only. Set the GMF: Exclude
Invoices which have no Receipts to Yes, so that only those invoices that have a matching
receipt in the current costing period are considered in the cost calculation. The invoices

recorded in the current period against receipts in earlier periods are ignored and any
difference in price is resolved using the Invoice Price Variance (IPV).
What is the criteria for a batch inclusion in actual cost calculations?

The Actual Cost Processor not only considers batches in Pending status but also
considers batches with other statuses like WIP, Completed, and Closed for actual
costing.
Understanding Actual Costing

OPM captures the actual costs from business transactions. Costs of raw materials are
captured based on the raw material purchase order receipts and or invoices. Costs of
products are captured based on the actual quantities of the raw materials consumed
and the resource usage or conversion cost recorded in the production batch. A
transaction history is maintained for reference.
Actual Cost Calculation Methods

Following are actual cost calculation methods:
Period Weighted Average Cost (PWAC)

This is the strict average cost of the raw material during the period, based on the total
estimated receipt (or invoiced) price for the entire inventory quantity. The period
weighted average cost is a strict average cost for the period based on Period Total
Quantity and Estimated or Final Prices.
PWAC is calculated by dividing -- the sum of the transaction quantity multiplied by
price -- by the sum of transaction quantity, as shown in the following illustration:
Where:
Trans Qty - Receipt Quantities or AP interfaced quantities within the costing period
Price - Receipt estimated prices or AP invoice final prices within the costing period
Period Moving Average Cost (PMAC)

OPM calculates the average cost for the period while moving previous period's cost
with last period's inventory balance and cost:
PMAC is calculated by dividing the result of -- the quantity of the prior period

inventory balance multiplied by the prior period cost, plus the sum of the transaction
quantity multiplied by price -- by the prior period inventory balance plus the sum of
transaction quantity, as shown in the following illustration.
Where:
Prior Period Inv Balance - This is the prior period inventory balance captured from the
inventory period ending balances.
Prior Period Cost - The prior period actual cost component from the cost component
details table.
Trans Qty - Receipt Transaction Quantities or AP Interfaced Quantities within the
costing period.
Price - Receipt estimated prices or AP invoice final prices within the costing period.
Perpetual Weighted Average Cost (PPAC)

The perpetual weighted average cost type computes the average cost for the entered
receipts and quantities within the defined boundaries of the cost calendar. The calendar
definition may in turn be identical to a fiscal year, or may span multiple fiscal years
providing the flexibility of a variety of Perpetual Weighted Average cost methods.
PPAC is calculated by dividing -- the sum of the transaction quantity multiplied by
price -- by the sum of transaction quantity, as shown in the following illustration:
Where:
Trans Qty - Receipt Quantities or AP interfaced quantities from the start of the costing
calendar to the end of the current period.
Price - Receipt estimated prices or AP invoice final prices within the costing calendar.
Last Transaction Cost

There are two methods for determining last actual cost of a raw material:
• LSTT - This method uses the last transaction within the costing period, regardless of
whether the transaction is a receipt or an Accounts Payable invoice.
• LSTI - This method uses the last Accounts Payable Invoice transaction within the

costing period, even if there are latest receipts with estimated prices. In the absence
of AP invoice transactions the latest receipt will be considered for the actual cost.
Last transaction cost adjustments will superseded any other transaction for the actual
cost. For both methods, the adjustment unit cost is the actual cost.
Last Transaction (LSST) - OPM uses the last transaction in the costing period as the
basis for the raw material cost (if there is no Accounts Payable invoiced cost for the
period, the last receipt price is used to cost the raw material).
Last Invoice Transaction (LSTI) - OPM uses the last Accounts Payable invoice
transaction in the costing period as the basis for the raw material cost, even if there are
raw material receipt transactions that occur later in the period. If there are no Accounts
Payable invoiced costs for the period, the last receipt price is then used to cost the raw
material. Actual cost adjustments supersede any of the methods used to calculate actual
cost - an adjusted cost is the actual cost.
Describing Transactions in Actual Costs

The actual cost is calculated as either raw material cost or product cost.
Transactions for Raw Material Cost Calculations

The raw material cost for an item in a organization is based on the following incoming
transactions:
• Purchasing receipts including Freight and Special Charges estimated on the PO,
returns, and corrections of receipts
• Paid invoices
• Opening inventory balances
• Cost overheads
• Cost adjustments
• General Ledger Expense allocations for indirect overheads
• Inventory transfers including process to discrete organization, interorg transfers

and internal orders within and across operating units
A weighted average of all the incoming transactions is taken to arrive at the material
component cost. During the actual cost process, overheads, expense allocations, and
adjustments are also applied to the item along with the material cost.

Transactions for Product Cost Calculations
When calculating the product cost, production batches are included as the incoming
transaction. All the other incoming transactions are similar to raw material cost
calculation.
Transactions Impacting Raw Material Costs
Purchasing Receipts and Invoices

The Actual Cost process includes the following purchasing details:
• Selects the receipt and invoice details data from the appropriate Oracle Purchasing
and AP Invoice tables.
• The Actual Cost process considers freight and special charges specified as affecting
inventory and calculates the item costs appropriately.
Inventory Transfer
Inventory Transfer is treated similarly as any other transaction in OPM such as Invoice
or Receipts and the cost is determined as the cost at the source inventory organization.
OPM Actual cost process supports the following types of transfers:
• Interorg transfers (Quantity at the source organization cost for transfers within an
organization, and transfer price is considered for transfers across organizations.
• Internal orders
• Transfer between process to discrete organization
The PMAC raw material cost calculation uses the following formula:
Where:
C is the desired cost for the current period using the PMAC cost method
Qx is the quantity received as a result of the transfer in the current period
Cx is the cost of transferred goods. This corresponds to the current period item cost at
the source inventory organization.

Qx2 corresponds to transfers released in a previous period, but received in the current
period.
Cx2 is the cost of transferred goods. This corresponds to the previous period item cost
at the source inventory organization.
The above formula can also be represented as:
Where:
C is the cost calculated by the PMAC cost method including transfers
Q(1) is the sum (Qp + Sum of (Qr) + Qa)
C(1) is the cost without the transfers, as calculated in the original formula before the
Inventory Transfer was implemented
The following example illustrates how the actual cost program will process transfers
and calculate actual cost.
Assume that the following is the previous period cost and previous period inventory
ending balances for the item CORN:NY inventory organization
Previous period cost: $2.05 / LB (pound)
Inventory Balance: 5000 LB (pound)
BOS Inventory Organization
Previous period cost: $2.90 / LB
Inventory Balance: 2000 LB
Additionally, following are the PO Receipts for the current period:
Item Inventory Receipt Date Receipt Price

Organization Quantity
CORN NY 2/2/2000 500 LB $ 1.50
CORN BOS 2/1/2000 1000 LB $ 1.75
The following describes the calculation of the item CORN including:

• PO Receipts
• Inventory transfer of 100 LB of CORN from NY to BOS inventory organization
Cost at NY inventory organization = (5000 LB * $2.05 + 500 LB * $1.50) / (5000 + 500)

11000 / 5500 = $2.00 /LB
Since the Inventory Transfer originated from the NY inventory organization, there is no
impact on the raw material cost calculation of the item CORN at the NY inventory
organization. Though the following calculation shows how the inventory transfer
affects the cost calculation of the item CORN at the BOS inventory organization:
Cost at BOS inventory organization = (2000 LB * $2.90 + 1000 LB * $1.75 + 100 LB * $2.00)
/ (2000 + 1000 + 100)
7750 / 3100 = $2.50 /LB
This is the actual cost calculated for the item CORN at the NY and BOS inventory
organizations. The Subledger program then uses this cost to book Inventory Transfers.
Transfers Between Process and Discrete Organizations

Inventory can be transferred from one organization to another using a simple
Inter-Organization Transfer or using Internal Orders where supporting transfer
documents are required. Actual Cost will consider the inventory transfers between
process inventory organizations within the same Legal Entity at the source organization
cost. For transfers that go across Legal Entities, the transfer price is used. For transfers
that originate from a discrete inventory organization to a process inventory
organization or vice versa, transfer price is used regardless of whether the transfer is
within or across Legal Entities.
In the case of process to discrete or discrete to process transfers, the difference between
the sending organization's cost and the transfer price is captured in a new account
called Inter-Org Profit account. The profit generated by such transfers is eventually
washed out when accounts are consolidated at the enterprise level.
Prerequisites
You must set up a transfer price for every combination of process and discrete
organizations between which such transfers will be done
The profile, CST: Transfer Pricing Option, in Oracle Costing controls whether to use
transfer price to cost internal order transfers across operating units and if so, whether to
use the transfer price as incoming cost or not. The profile is used only for transfers from
Discrete to Discrete Inventory Organizations only.
• No support for lot level costing is provided across such transfers
• No support for elemental/subelemental visibility is provided across the transfer

since a transfer price is being used
Types of Transfers
All types of transfers:
• direct or intransit transfers using the interorganization transfer
• direct or intransit transfers using internal orders

• transfers across operating units, across sets of books
are allowed between process and discrete organizations.

Changes to Shipping Networks Window
The Shipping Networks window, in the Oracle Inventory application, includes a tab
Transfer Price. This tab includes two fields, Price List and Interorg Profit Account.
The price list is used to derive the transfer price with the static pricing option by both
the OPM cost processor and Oracle Costing PAC cost processor. The perpetual costing
processors of Oracle Costing will ignore the transfer price.
The Inter-Organization Transfer form is used to create a transfer between any two
organizations. Set up a transfer price between two organizations if the transfer happens
between a process and discrete organizations. If the transfer price cannot be derived at
the transaction creation time, then the transfer fails.
Cost Manager Concurrent Process
A transfer creates two transactions in material transaction table. One is the shipment
and the other is the receipt transaction.
The Cost Manager derives costs for discrete organization owned transactions (the other
being the process organization owned transaction).
For intransit transfers, there is an impact on the discrete organization from the process
transaction and vice-versa and costing and accounting depend on the FOB point set up
for the transfer.
The Cost Manager generates accounting entries for the discrete organization that is
impacted by this transfer. For intransit transfer to a discrete average, LIFO (Last In First
Out), and FIFO (First In First Out) costing organization with FOB set to Shipping then
the Cost Manager re-averages the cost in the target organization on completion of the
first shipment transaction.
For example, a transfer originates from a discrete organization, M3, to the process
organization, PR1. The FOB point is Receiving. When the transfer is shipped from M3, a
row is created in the Material Transactions table for the source organization (M3). The
Cost Manager costs these transactions. When the transaction is received in PR1, a
second row is created in the transaction table for the target organization (PR1). The
transaction is owned by PR1 but an accounting entry is generated for M3 to clear the
intransit entry and record an Interorg Receivables entry. The journal entry for M3 is
created only when the receipt is completed.
When the inventory is transferred from process organization (PR1) to discrete
organization (M3) and the FOB point is Shipping, then a journal entry is created for M3
when the transfer is shipped. An intransit and interorganization payables journal
entries are created for M3, target organization. If M3 is an average cost organization,
then the cost in M3 is also re-averaged based on the incoming cost.
OPM Actual Cost Concurrent Process
The OPM Actual Cost Process includes all transfers including the ones originating from

a discrete organization.
The cost of the incoming transfer from a discrete organization is considered at the
transfer price established between the two organizations.
The following features are supported:
• Transfers both from process and discrete organizations are considered for cost
calculations
• Transfers from discrete organization are considered at the transfer price
• Since transfer price is used, transfers within and across operating units are also
considered for cost calculations
Overhead Costs
Actual overhead cost calculations are identical to the standard cost overhead calculation
used during the standard cost rollup process. It is important to note that overhead costs
may be defined and computed for raw materials or products. Therefore, overhead cost
must be computed prior to computing the production costs.
Overhead Unit Cost is calculated by dividing the Item Quantity into the sum of --
Overhead Usage, multiplied by Overhead Quantity, multiplied by Resource Cost, as
shown in the following illustration.
Expense Allocations
You can take an expense amount and allocate it through to multiple raw materials or
products on a percentage basis. You can perform any last minute adjustments to
allocations prior to Actual Cost calculations.
Ensure that expenses are allocated in the correct period and that batches are completed
and closed in the same period.
Another alternative is to enter the account balances into OPM manually using Cost
Allocation Maintenance.
GL Expense Allocation Calculation

The Raw Material and Expense calculations consider the Prior Period Inventory Balance
and Allocation component costs when computing averages. This method ensures that
there is no mismatch between the Inventory Accounts and Inventory valuation based
on unit cost. The current period transaction quantity considered for PMAC Raw
Material Expense calculations is the total receipt quantity in that period and not
overridden by the consumption quantity, if any.

However, the cost calculation for PMAC has been modified to include the prior period
inventory balance and the prior period cost as follows:
• For raw materials, the expense amount is calculated as the sum of expenses to be
allocated and the product of prior period inventory balance and prior period cost.
This is represented as:
GL Expense component cost = [(Previous Period Inventory Balance * Previous
Period Expense Component Cost) + Expense Amount for Current Period] /
[Previous Period Inventory Balance + Received Quantity]
• For products, the quantity is determined as sum of the previous period balance, the
total quantity produced and the total quantity received, if any. The expense amount
is the sum of expenses to be allocated in the current period and the product of prior
period inventory balance and prior period cost. This is represented as:
Expense component cost = [(Previous Period Inventory Balance * Previous Period
Component Cost) + Expense Amount for Current Period] / [Previous Period
Inventory Balance + Produced Quantity + Received Quantity (if any)]
The expense allocations are averaged using prior period inventory balance for items
that have no current period transactions, such as receipts or production.
Whenever there is a non-zero expense amount that could not be allocated because the
total quantity is zero, a warning is displayed.

Actual costs are recalculated based on the adjustments that you enter for the specified
item, inventory organization, cost calendar, and cost period.
The Actual Cost Adjustment supports three adjustment types:
• Average Cost Adjustment
• Value Adjustment
• Unit Cost Adjustment
The Average Cost Adjustment type lets you enter a quantity and a cost. This adjustment
simulates a transaction that happened outside the OPM Actual Cost process. For
example, if you use a third party system to record transactions, then use this adjustment
type to replicate the event to include in cost calculations. The Actual Cost process
considers these transactions similar to a purchase order receipt.
The Average Cost Adjustment is calculated as follows:

The Value Adjustment type lets you enter an adjustment without a quantity with a
value to apply to the entire quantity considered for actual cost calculations.
The Value Adjustment is calculated as follows:
The Unit Cost Adjustment type lets you adjust the actual unit cost of the item with the
specified cost. The Actual Cost process calculates the cost of the item per the current
logic and then applies this unit cost adjustment to calculate the new adjusted cost. This
adjusted cost becomes the new actual cost of the item.
First the New Unit Cost (without the Unit Cost Adjustment) is calculated as follows:
The Unit Cost Adjustment is included only after the Actual Cost is calculated based on
the existing Adjustment types. Then, the New Unit Cost (with the Unit Cost
Adjustment) is calculated as follows:
Transactions Impacting Product Costs
Product Costs
You can let OPM calculate actual costs of products, which is useful if you need to
spread actual product costs for the period over more than one cost calendar period. For
example, assume you have a steady level of production for ten straight periods in a cost
calendar. If production soars in the eleventh period, then production costs for that
period soars also.
OPM uses one of the following methods to calculate product cost so that those
greater-than-usual product costs for the period are redistributed, and leveled, over a
greater period of time:
• 1 - Period Moving Average Cost (PMAC)
• 2 - Period Weighted Average Cost (PWAC)
• 3 - Perpetual Average Cost (PPAC)

Note: Raw material calculation and product calculation types can
be different. For example, raw materials can be calculated based on
Period Weighted Average Cost (PWAC), and products based on
Period Moving Average Cost (PMAC).
Period Moving Average Cost (PMAC)

OPM calculates the cost of the product based on closed batches in this period, and also
on prior-period inventory balances and period costs.
Example 1:
When the product is produced, but not received or invoiced in this period, the
following calculation takes place:
PMAC = [(PBAL * PCOST) + BCOST] / (PBAL + BQTY)
Where:
PBAL is the closing inventory balance for item at current inventory organization in
prior period. This is the same for all cost components for item.
PCOST is the component cost from previous cost period.
BCOST is the sum of component costs of all ingredients in all batches for the specific
cost component, in this period.
BQTY is the total quantity produced in all batches in this period. This is the same for all
cost components for item.
RCOST is the total receipt cost for this component in this period this amount was used
in raw material cost calculation for the item.
RQTY is the quantity used in raw material cost calculations for this item.
Example 2:
When the product is both produced and received or invoiced in this period, the
following is calculated:
PMAC = [(PBAL * PCOST) + BCOST + RCOST] / (PBAL + BQTY + RQTY)
Period Weighted Average Cost (PWAC)

Calculates cost of a product based on current-period transactions only. All closed
batches in the period are considered.
Example 1:
PWAC = BCOST/BQTY
Example 2:

PWAC = (BCOST+RCOST)/(BQTY+RQTY)
Where:
BQTY is the total quantity produced in all batches in this period (this will be same for
all cost components for item).
RCOST is the total receipt cost for this component in this period. This amount was used
RQTY is the quantity used in raw material cost calculations for this item.
Period Perpetual Average Cost (PPAC)

Calculates average cost of a product based on the entire calendar's transactions and
batches up to and including the previous period, and the current period.
Example 1:
PPAC = PPAC_COST + BCOST/PPAC_QTY + BQTY
Example 2:
PPAC = PPAC + BCOST + RCOST/PPAC + BQTY + RQTY
Where:
PPAC_COST is the result of the transaction quantity "times" transaction component cost
for calendar to prior-period transactions this includes all the calendar to prior period
receipt transaction batches and adjustments.
PPAC_QTY is the sum of transaction quantity for calendar to prior-period transactions.
BQTY is the total quantity produced in all batches in this period (this will be same for
all cost components for item).
RCOST is the total receipt cost for this component in this period. This amount was used
RQTY is the the quantity used in raw material cost calculations for this item.

Production Batch Costs
Actual ingredient usage from Production is captured for closed batches. Ingredient cost
is calculated by the actual cost raw material method for your cost method.
Actual resource usage, count, and throughput are captured in the OPM Process
Execution application. Resource rate or nominal cost is entered in costing.
Batch unit cost is calculated by dividing -- the sum of ingredient quantity, multiplied by
the ingredient actual cost, plus the sum of resource use multiplied resource rate -- by
the batch item quantity, as shown in the following illustration:
Period Product Unit Cost is calculated by dividing -- the sum of the period batch
quantity multiplied by batch unit cost, plus the sum of allocations multiplied by the
sum of adjustments -- by the sum of all period batch quantity, as shown in the following
illustration:
Production Batches
In Process Execution, when a lab batch is created you can specify whether to update
inventory by checking the Update Inventory box. If you do not check this box, then the
work-in-process inventory organization is set to null. In this case, no inventory
transactions are created and the Actual Cost process ignores these batches in cost
calculation. As a result, the variances are not calculated.
Recipe Process Loss

The Actual Cost process considers the process loss when determining the costs. The
process loss is defined as the percentage specific to the formula and process routings
(Recipe) and is applied to the product yield. The batch transactions include the process
loss to determine the actual consumption and output of an item.
Activity Factors and Charges

The activity factor indicates the number of times an activity is performed. The factors
are applied to resource usage when calculating resource costs.
Number of Charges is determined by capacity and relates to the number of times a

routing step, an activity, or a particular resource (the level where charges are
maintained depends on the user setup) needs to be performed. This is specific to a
recipe. The New Product Development includes a new operation scaling type, Fixed by
Charge. This scaling type determines if the resource cost is fixed by the number of
charges. The Cost Rollup process considers the new scaling type and computes the costs
accordingly. Refer to Oracle Process Manufacturing Product Development User's Guide for
details on the Fixed by Charge scaling type.
The Actual Cost process considers both activity factors and charges as they are included
in the batch transaction details when calculating costs.
Reopen a Production Batch

The Actual Cost process lets you reopen a batch to correct entries. If the batch details
were used in calculating the actual cost of a product, then a warning message displays.
Run the Actual Cost process again to ensure that the costs are accurate and reflect the
changes. If a batch is already posted or has contributed to a frozen actual cost, then it
cannot be reopened.
Inventory Transfer of Products

The Actual Cost process supports inventory transfers of products. The costs from the
source inventory organization is considered in the cost calculation to arrive at an
accurate cost of the item in the destination inventory organization.
• A product in source or destination inventory organization and the transfer is
completed within a period.
• A product in a destination inventory organization and transfer is completed across

periods.
• A product in a source inventory organization and the transfer is canceled across

periods.
The canceled transfers within a period are ignored.

In manufacturing companies, material transfer between legal entity locations is a
common practice depending on production or other requirements. A raw Material or
product is transferred to a consumption facility to produce a product or to a
distribution facility to ship to a customer. For example, oranges are first received into a
processing facility, and then transferred to a production facility to produce a final
product. This final product, from multiple inventory organizations, is transferred to a
distribution facility to ship to customers. To calculate the actual cost, all the costs of the
item at the source locations is included in the average cost at the receiving location.
The two common types of product transfers are:
• Transfer of a product from a production inventory organization to a destination
inventory organization

• Transfer of a product from multiple production inventory organizations to a
distribution inventory organization
To evaluate the cost of an item, the Actual Cost process looks at transfer records, which
are either completed or canceled in the current period.
Product Transfer Example 1: Product transfer from production inventory organization to a distribution inventory
organization
In this example, the cost for the product PROD-A is as follows:
Production Inventory Organization: WHS1
• Cost: $5.00 per LB
Distribution Inventory Organization: WHS2

Transfer 100 pounds of product PROD-A from the production inventory organization
WHS1 to distribution inventory organization WHS2. The inventory transfer originates
from WHS1, there is no impact on the cost in that inventory organization. Cost is
impacted at WHS2 as shown:
• Cost at WHS2 = (Previous Balance * Previous Cost) + (Transfer Qty * Unit Cost at
WHS1) / (Previous Balance + Transfer Qty)
= ((500 * $6) + (100 * $5)) / (500 + 100) = (3000 + 500)/600 = $5.8333 per LB
Product Transfer Example 2: Product transfer from multiple production inventory organizations to a distribution
inventory organization
In this example, the cost for the product PROD-A is as follows:

Distribution Inventory Organization WHSE3: No cost exist.

Transfer 100 pounds of product PROD-A from production inventory organizations
WHS1 and WHS2 to a distribution inventory organization WHS3. Incoming transfers
are averaged to get the cost at the destination inventory organization WHS3 as shown:

• Cost at WHS3 = (Transfer Qty from WHS1 * Unit Cost at WHS1) + (Transfer Qty
from WHS2 * Unit Cost at WHS2) / (Previous Balance + Transfer Qty)
= ((100 * $5) + (100 * $6)) / (100 + 100) = (500 + 600)/200 = $5.5 per LB
Product Transfer Example 3: Raw material transfer in source and product in destination locations
This example shows the item PROD is produced from the ingredient item RAW-MATL
in period 2. The items have following costs in period 1 and 2 as shown in the tables:
Period 1
Item Inventory Item Quantity Item Cost

Organization
PROD WHS1 100 LB $10.00 per LB
RAW-MATL WHS1 100 LB $10.00 per LB
n/a WHS2 100 LB $5.00 per LB
Period 2
Transaction for PROD
Transaction Inventory Organization 1 Inventory Organization 2

(WHS1) (WHS2)
Receiving 10 LB at $1.00 n/a
Transfer 100 LB to WHS2 100 LB from WHS1
Production None 200 LB from 400 LB of

RAW-MATL

Item Inventory Item Cost Onhand Quantity
Organization Code
PROD WHS1 $9.18 per LB 10 LB (received) at

the cost of $1.00
Raw material
calculation:
(10*1 + 100*10) /
(10+100)
n/a WHS2 See next table 200 LB produced

from 400 LB of raw
material
The subsequent tables describe the affect of transactions on item cost in WHS1 and
WHS2. The transfer is completed or canceled in the period 2.
Transfer is released and completed in period 2.
Transfer Release Cost Inventory Cost (P2) Comments

Status Period Organization
Completed P2 WHS1 $9.18 No impact of

transfer. Cost is
from receiving
n/a P2 WHS2 $9.73 (400*5 + 0 +

100*9.18) /
(200+100)
Production +
Period 1 Balance +
Transfer Cost at
WHS1 in Period 2
Transfer is released in period 1 and completed in period 2.
Transfer Status Release Period Cost Inventory Cost (P2) Comments

Organization
Completed P1 WHS1 $9.18 No impact of

transfer. Cost is
from receiving

Organization
n/a P2 WHS2 $10.00 (400*5 + 0 +

100*10) /
(200+100)
Production +
Period 1 Balance
+ Transfer Cost
at WHS1 in
Period 1
Transfer is released and canceled in period 2.

Organization
Canceled P2 WHS1 $9.18 If the transfer is

canceled in the
same period as
the release, then
the cost is not
affected
n/a P2 WHS2 $10.00 (400*5) / 200
Only production,
no impact of
transfer
Transfer is released in period 1 and canceled in period 2.

Organization
Canceled P1 WHS1 $9.96 (100*10 + 100*10

+ 10*9.18) /
(100+100+10)
Transfer Cost at
WHS1 in Period
1 + Period 1
balance + Period
2 cost

Organization
n/p P2 WHS2 $10.00 (400*5 + 0) / 200
Production +
Period 1 balance,
no impact of
transfer
Calculating PMAC Cost with Circular References

The actual cost calculates the cost of items in a circular reference repeatedly, until it
arrives at a cost that does not change. The cost from the previous iteration is used in the
current iteration. The cost is recalculated until the cost in the previous iteration and the
current iteration match. To restrict the Actual Cost process from running infinite
number of iterations, a maximum limit of 200 is set in the program. You can override
this value by changing the profile value for GMF: Actual Costing Maximum Iteration
Limit for Circular Reference.
Using the PMAC Method, OPM calculates the cost of the product based on closed
batches in this period, and also on prior-period inventory balances, using the following
calculation:
PMAC ITEM A = [(PBAL * PCOST) + BCOST] / PBAL + BQTY
Where:
PBAL is equal to 2948
PCOST is equal to 109.14
BQTY is equal to 1000
PMAC Cost ITEM B is equal to 12.034
BCOST = (PMAC Cost ITEM B * 1000 + PMAC Cost ITEM A * 500)
Iteration 1 = [(2948 * 109.14) + (1000 * 12.034 + 500 * 109.14)} / 2948 + 1000 = 98.40
Iteration 2 = [(2948 * 109.14) + (1000 * 12.034 + 500 * 98.40)} / 2948 + 1000 = 97.00
Iteration 3 = [(2948 * 109.14) + (1000 * 12.034 + 500 * 97.00)} / 2948 + 1000 = 96.83
Iteration 4 = [(2948 * 109.14) + (1000 * 12.034 + 500 * 96.83)} / 2948 + 1000 = 96.81
Iteration 5 = [(2948 * 109.14) + (1000 * 12.034 + 500 * 96.81)} / 2948 + 1000 = 96.80
Iteration 6 = [(2948 * 109.14) + (1000 * 12.034 + 500 * 96.80)} / 2948 + 1000 = 96.80
Since the PMAC Cost for Item A stabilizes after the 6th iteration at a cost of 96.80, the
calculation stops.

Setting Up Expense Allocations
Accrued indirect costs (such as material overhead) maintained in accrual accounts can
be included in actual cost calculations. These accrued costs are captured from General
Ledger. Define the parameters to allocate accrued costs automatically to designated cost
component classes.
Expense Allocation Setup Chronology
1. Define Allocation Codes
2. Define Expense Allocation Accounts
3. Define Allocation Definitions
Defining Allocation Codes

Allocation codes are required to bring in balances from General Ledger expense
accounts. You can define parameters to allocate these expenses to appropriate cost
component classes.
Since allocations can be processed in multiple steps, we recommend that you adopt a
naming convention to simplify processing of ranges of allocation codes.
To define allocation codes:

1. Navigate to the Allocation Codes window.
2. Specify the Legal Entity for which you are defining expense allocations. Required.
Allocation Code Details

3. Enter a code that defines the expense allocation in Allocation Code. Required.
4. Enter a brief Description of the expense allocation. Required.
Defining Allocation Basis

On this window you specify the item, component class, and related information
required to identify where the allocation details are generated. The accounts maintain
the information (for example, the quantity of production and machine usage) associated
with each item. The allocation is setup and are based on GL balances.
When you enter item code and tab out of the field, the cost component class, analysis
code, and inventory organization fields default from the previous record.

To define allocation definitions:
1. Navigate to the Allocation Definitions window.
2. Specify the Legal Entity for which you are entering allocation.
3. Specify the allocation code for which you are entering allocation definitions in
Allocation Code. The corresponding allocation description displays automatically.
Required.
4. Indicate the allocation method to use in Allocation Basis. Select GL Balances if the
allocation percentage is to be calculated based on the balance in the basis account.
When you use this allocation type, you define the account key, balance type, and
period and year-to-date.
Select Fixed % to use a fixed percentage for the calculation. If you use this allocation
type, then the Account, Balance Type, and Period and Year-to-Date fields are
bypassed; you only enter percentages by item. The allocation basis applies to all
lines for the allocation code. Required.
Basis - GL Expenses
5. Line displays the generated number for each line.
6. Enter a valid Organization. Required.
7. Specify the Item to which expenses are allocated. Required.
8. If you specified GL Expenses in the Allocation Basis field, then specify the account
from which the basis amount is used to determine the allocation percentage in the
Account field. Required.
9. Description displays the description of the basis account.
10. Enter the Balance Type for the basis account type. Required.
• Statistical
• Budget
• Actual
11. Specify the year-to-date or period-to-date indicator in Year-to-date/Period-to-date.

Select Period-to-date if this balance amount should be used to calculate the
allocation percentage. Select Year-to-date if this balance amount will be used to
calculate the allocation percentage. Required.

Basis - Other
This region contains Line, Organization, Item, and Basis Type as described in the
previous topic.
12. If the fixed allocation method is used, then enter the allocation for the line in
Fixed%. If you specified GL Expenses in the Allocation Basis field, you cannot edit
the entry. Percentages are calculated dynamically.
You can enter allocation definition details whose total percentage value does not
equal 100%. If your total percentage value is less than or greater than 100, then a
warning displays when saving the window. You can either save without making
any changes or go back and correct the percentage values.
The Cost Allocation process flags such codes as not equal to 100 percent and
ignores these codes during processing. The system displays the total percentage
entered until the save. It allows you to selectively enter more records or update
existing records.
Cost Information
13. Item Description displays a description of the item.
14. Enter a valid Component Class Code. Only those component classes that were
defined as allocation detail are available in the list of values and only one of these
can be entered. Required.
15. Enter a valid Analysis Code.
Note: After you have defined expense allocations, you must define
the accounts to which overhead expenses will post when those
expense allocations are used. See the Define Expense Allocation
Accounts discussion for details.
Defining Expenses to Allocate

This window lets you indicate the accounts where the expenses are tracked in General
Ledger. In this window, you define the expense pool to allocate; and on the Allocation
Definitions window, you specify the products to which these expenses are allocated.
Note: Ensure that the expenses are allocated in the same period that
they were incurred in.
When using Actual Costing,

To define allocation accounts:
1. Navigate to the Expenses to Allocate window.
2. Specify the Legal Entity. Required.
3. Specify a valid Allocation Code defined for the legal entity for which you are
allocating expenses to. The allocation code description displays automatically.
Required.
Expense Pool - Accounts

4. OPM automatically displays Line numbers in sequence. You cannot edit the entry.
5. Enter the From Account.
6. Enter the To Account.
7. Specify the account's Balance Type used for this expense pool. The available options
are:
• Statistical
• Budget
• Actual
8. Specify if the expense should be year-to-date or period-to-date balance in Period to

Date/Year To Date. Required.
Expense Pool - Description

This region has Line, From and To Account Description, Balance Type besides the
Period to Date/Year to Date as described.
9. Specify if the expense should be year-to-date or period-to-date balance in Period to
Date/Year To Date. Required.
Using Material Cost Component Classes

If you want to track the entire batch from the individual raw material to intermediary
and end product, then setup a unique component class and analysis code for the raw
material and ingredient calculation. Item costs are defined using the component classes
and analysis codes. You setup the component class and analysis code while calculating
raw material cost for purchases and transfers.

To associate material component classes and analysis codes:
1. Navigate to the Material Cost Component Class window.
2. Enter the Legal Entity for which you are defining material component classes.
Required.
3. Enter a valid Organization. Required.
4. Enter a valid Item Cost Category. If you enter a valid item cost category, then the
Item field is not available and your cursor is moved to the Material Component
Class field. You can leave the Item Cost Category blank and specify an item instead.
5. Enter a valid Item. If you enter a valid item code, then the cursor moves to the
Material Component Class field.
Material Components
6. Enter a valid Component Class Code. It is treated as a material component class
either for an item cost category or an item. You can designate any cost component
class as the material component class. Required.
7. Specify a valid cost Analysis Code. It is treated as a material analysis code in

combination with the material cost component class either for an item cost category
or an item. Required.
8. Indicate the Start Date for the material component class and cost analysis code
definition effective from. Required.
9. Indicate the End Date for the material component class and cost analysis code
definition until which they are effective to. Required.
Note: It is recommended that the costing period start and end dates
should be one day later than the General Ledger calendar. For
example, the following scenario supports this suggestion:
Start and End Date1/1/96-12/31/97 General Ledger Calendar
4/1/96-4/30/97 Costing Calendar4/1/96-5/01/97
Defining Adjustment Reason Codes

If there is a need to adjust actual costs calculated by OPM, then use the Actual Costs
Adjustments to enter the adjustment costs. You must specify a valid reason code to
justify the reason for the cost change.

To define adjustment codes:
1. Navigate to the Actual Cost Adjustment Code window.
2. Specify the Code that explains the reason for adjusting the actual cost calculation
for a raw material or a product. Required.
3. Enter a brief Description of the reason (for example, "Supplier Price Increase").
Required.
4. Select the Subledger Entry box to indicate whether to book the adjustment to
subledger or not.
Processing Cost Allocations

This procedure allocates accrued expenses from the general ledger accounts to the
appropriate costing allocation codes.
This functionality requires Oracle General Ledger to be fully installed. If you are using
OPM not integrated with Oracle Financials, and GL is not fully installed, then a
warning message displays and the data you enter may not be used.
To process cost allocations:

1. Run the Cost Allocation Process concurrent process by running the Report and
selecting the process. The following restrictions pertain to running the Cost
Allocation process:
• You can only run one allocation process at a time
• You cannot run process for a closed period
• You can only use calendar belonging to the legal entity for which you have
authorization
Note: Use the Reset option in the event of abnormal shutdown

during a process (that is, for any situation in which the process
did not end normally). This option resets internal parameters.
2. Legal Entity linked to this cost calendar (on the Cost Calendar window) displays
automatically. You cannot edit the entry.
3. Cost Calendar indicates the cost calendar for which you are allocating expense
costs. Required.
4. Period indicates the cost calendar period for which you are allocating expense costs.

Required.
5. Indicate the Cost Type you are running for.
6. The Period Status of the cost calendar period you specified displays automatically.
You cannot edit the entry.
7. Fiscal Year indicates the fiscal year (defined in the appropriate General Ledger
application) from which cost expenses will be selected for processing.
8. Period indicates the fiscal year period (defined in the appropriate General Ledger
application) from which cost expenses will be selected for processing.
Note: The GL Fiscal Year and Period must be valid for the cost
calendar's legal entity. Otherwise, an error displays.
9. You have the option of exporting cost expenses for all allocation codes, or
restricting the export to cost expenses for a range of allocation codes in Allocations
From and To.
10. Indicate whether to delete previous data that were processed for the cost expense
allocation parameters by selecting Yes or No for Refresh Interface.
11. Click Ok and Submit to run the process.
Running the Actual Cost Process

Describes running the Actual Cost process. If you have enabled the Landed Cost
Management functionality for your organization, then the Actual Cost Process
considers the estimated and actual landed cost adjustments in cost calculations and
updates the cost adjustments in the Actual Cost Adjustments window.
Actual Cost Prerequisites
The following prerequisite conditions must be met in order to produce accurate actual
cost calculations:
• All Purchasing receipts and invoices must be entered, with any necessary price
corrections.
• Freight and special charges must be entered.
• It is recommended that you close all production batches that can be closed.
• Expense allocations must be completed.
• All overhead details must be assigned.

• All actual cost adjustments must be completed.
• For PMAC, the prior period must be closed or preliminary closed.
To run the actual cost process:

1. Navigate to the Actual Cost Process window. The Start Actual Cost Process
window displays.
2. Enter the Legal Entity.
3. Enter the Calendar. Costs are processed for the legal entity and the cost type linked
to this calendar. Required.
4. Enter the Period for which actual costs are processed. This period defines the start
and end dates for selecting all transactions. This period in the cost calendar must be
either open or frozen (a closed period cannot be entered). Required.
5. Period Status displays the status of the calendar period (Open, Closed, or Frozen).
You cannot edit this field.
6. Specify the actual Cost Type for which all cost calculations are calculated and
updated. The default is the cost type linked to the cost calendar. The cost type also
defines which raw material cost calculation type or product calculation type is used
in cost calculations.
7. Specify the date and time that the actual cost processing should start in Start Date.
To start the process immediately, click Now.
8. Click Accept to run the process.

Note the reference number assigned by OPM.
9. OPM assigns an identifier number for each individual cost process in Actual Cost
Reference . You cannot edit the entry.
Actual Cost Process - Additional Menu Features - Actions Menu
• Start - Displays the Start Actual Cost Process window, where you specify the
criteria by which OPM will select the costs to be processed.
• Process Status - Use this option to review the status of an actual cost process
that is in progress. You can also review figures from previous processes, each of
which is identified by the AC Ref No. The AC Ref No lookup is available to
help you in selecting previous processes for query.
• Abort/Reset - Use this option to abort the actual cost process that is running
currently. For situations where a process was terminated unintentionally (such

as a power failure), this option also resets the internal controls and settings
required to start the costing process again.
• View Error Messages - Use this option to review any errors generated during an
actual costing process run. The Actual Cost Error Messages window displays.
Note: The Actual Cost Process does not calculate costs for expense
items. The process calculates costs for inventory items only. If you
want the process to include the expense of an item in cost
calculations, then you must include the item as an inventory item.
Viewing the Actual Cost Process

To view the actual cost process:
1. Navigate to the Actual Cost Process window.
2. OPM assigns an identifier number for each individual cost process in the Actual
Cost Reference field. You cannot edit this field.
Selection Criteria
3. Displays the legal entity in the Legal Entity field.
4. Displays the calendar in the Calendar field. Costs are processed for the legal entity
and the cost type linked to this calendar.
5. Displays the period for which actual costs are processed in the Period field; this
period defines the start and end dates for selecting all transactions.
7. Displays the actual cost type for which all cost calculations are calculated and
updated in the Cost Type field.
Scheduling Information
8. Scheduled On displays when the Actual Cost process was scheduled to run.
9. Started On displays the start date of the Actual Cost process.
10. Started By displays the user ID and name of the person who started the Actual Cost
process.
11. Ended On displays the end date for the Actual Cost process.

Errors
12. Limit displays the error limit.
13. Found displays the number of errors found during the Actual Cost process run.
14. Posted displays the number of errors posted.
Abort Information
15. Aborted By displays the name of the user who aborted the Actual Cost process.
16. Aborted On displays the date on which the process was aborted.
17. Aborted Reason displays the reason for aborting the subsidiary ledger update
process.
Viewing Actual Cost Error Messages

To view the actual cost error messages:
1. OPM assigns an identifier number for each individual cost process in Actual Cost
Reference. You cannot edit the entry.
2. Line displays the line on which the error occurred.
Aborting or Resetting the Actual Cost Process

This option lets you abort or reset the Actual Cost process.
1. Navigate to the Actual Cost Process window.
2. Select Abort/Reset from the Actions menu.
3. Enter the abort details and the reason to abort the process.
Viewing Actual Cost Transactions

OPM allows you to view the transactions in a costing period that it used to calculate
actual costs; the most recent actual costing transactions display first. You can also view
actual cost transactions from the previous period.
Possible sources of these transactions are as follows:
• Purchase Order Receipts

• Actual Raw Material Invoice Prices (through interface with an Accounts Payable
application, such as Oracle Accounts Payable)
• Overhead Details
• Production Batches
• Resources
• Actual Cost Adjustments
• PO Internal Orders
• Invoices Entered in Payables
• Transfers
You can also display the Actual Costs Transactions View from the Cost Details and the
Cost Adjustments forms Actions menus (with key field values already filled from those
forms).
To view the actual cost calculations:

1. Navigate to the Cost Details window.
2. Select Actual Transaction View from the Actions menu.

• You can also access the Actual Cost Transactions View window by selecting
View Transactions from the Actual Costs menu.
3. Enter the Item for which you want to display actual cost calculations. Required.
4. Enter the fiscal Calendar for which you want to list actual cost transactions.
Required.
5. Specify the calendar Period for which you want to list actual cost transactions.
Required.
6. Indicate the actual Cost Type for which you want to list actual cost transactions.
7. Item Cost displays the item's total cost.

Also, displays the currency in which the cost is calculated and the item's primary
unit of measure.
8. Enter Prior Period Cost as the item cost in the period before the current period.

9. Enter Prior Period Closing Balance as the closing on-hand quantity of the item in
the period before the current period.
Actual Cost Transactions

10. Source indicates the source of the actual cost transactions which OPM uses to
calculate actual costs. These sources are listed:
• Batch Material Cost
• Batch Resource Cost
• Overhead Cost
• PO Receipts (OPM)
• GL Expense Allocations
• AP Interface
• Inter-Org Transfers
• PO Receipts
Using Actual Cost Method for a Product Item, the costs from Ingredients are
displayed at Lower Level. Actual Item cost based on PO Receipts, Resource
Cost on Product, Expense Allocations, Overheads , actual Cost Adjustments are
displayed at This Level cost
• Internal Orders
• Inventory Movements
• Inter-Company Transfer
• Inter-Company Internal Order
• Inter-Org Internal Orders
• Value Adjustments
• Unit Cost Adjustments
• Average Cost Adjustments
• Actual LC Adjustments
11. Organization is the code for the organization in which the transaction originated.

12. Document Number is the number of the document which originated the
transaction.
13. Component Class Code displays the component class for the actual cost calculated
for the transaction.
14. Analysis Code displays the cost analysis code for the actual cost calculated for the
transaction.
15. Cost displays the actual cost calculated for the transaction.
16. Quantity is the transaction quantity at this source, in the item's unit of measure. For
production batches, this is the actual yield quantity. For purchase order receipts,
this is the total quantity received.
Note: If the costing method is Actual, then you cannot update the
flexfields in the Cost Details window.
Viewing Item Cost List

Use this window to display item costs for a particular cost calendar, period, and cost
type. You can display costs a range of items or item classes for a particular calendar,
period, and cost type.
To display the item cost lists:

2. Select Item Cost List from the Actions menu.
3. Enter the cost Calendar for which you want to display item costs. Required.
4. Enter the cost calendar Period for which you want to display item costs. Required.
5. Enter the Cost Type code for which you want to display item costs.
Selection Range
6. To display item costs for a range of item cost categories, enter the first item and the
last item cost categories in the range (alpha-numerically) in Item Cost Category
(From, To).
7. To display costs for a range of items, enter the first item and the last item in the
range (alpha-numerically) in Item (From, To).

8. Select Accept to display the Item Cost List window.
This Level
9. This Level Cost displays the sum of this level costs cost component values.
10. Usage Type indicates the classification of the component class associated with the
cost for that line. Usage type has one of the following values:
• Material
• Resource
• Overhead
• Expense Allocation

While entering standard costs, only cost component classes of usage type
Material or Standard Cost Adjustment can be entered.
First, select the usage type and then only select a cost component to enter the
costs.
11. Enter a Component Class Code.
12. Description displays the description of the Component Class Code.
13. Enter an Analysis Code.
14. Enter the cost of each component in Component Cost.
15. Cost Origin displays the origin of the cost data. Indicates if the cost is calculated or
derived using one of the following methods:
• Carried over from the previous period by actual costs
• Copied using the Copy Cost process
• Loaded through the Costing APIs
• Merged lower level costs with this level costs during the Copy Cost process
Lower Level
The meaning of the fields are the same as that in the This Level but the costs are
shown for display only. Lower Level costs cannot be entered directly. Cost Rollup
calculates costs for products and the material costs from formulas are shown at the
lower level.

Note: Using Actual Cost Method for a Product Item, the costs from
Ingredients are displayed at Lower Level. Actual Item cost based
on PO Receipts, Resource Cost on Product, Expense Allocations,
Overheads , actual Cost Adjustments are displayed at This Level
cost
Item Cost List Window

1. Item displays the item for which costs (on this line) are shown.
2. Unit of Measure displays the unit of measure for which costs are shown. The cost
shown is for one unit of this item.
3. Inventory Organization displays the inventory organization, in which this item is

stored, for which costs are shown.
4. Cost displays the nominal cost for this item, in this inventory organization
5. Description displays the description of this item.
Viewing Overhead Details

The Overhead Details window displays overhead cost details for an item. The window
displays the overhead costs set up for the item.
The cost displayed shows the contribution that overheads make to the total unit cost.
These figures are entered on the Overhead Detail window.
To view overhead costs:

2. Retrieve the Cost Details of the product using either the View Find All option or by
entering a wildcard value with Query Enter.
3. Select Overhead Details from the Actions menu.
4. Item displays the item for which cost overheads display.
5. Inventory Organization displays the inventory organization associated with this

item, for which overhead costs apply.
6. Resource displays the resource assigned as a overhead for the production of this
item.

7. Component Class Code displays the component class associated with this resource,
and used for the overhead cost calculation. Component classes are associated with
overheads on the Overhead Details window.
8. Analysis Code displays the analysis code associated with this resource and used for
the overhead cost calculation. Component classes are associated with overheads on
the Overhead Details window.
9. Overhead Cost displays the calculated overhead cost. The cost equals the resource
cost multiplied by the quantity of the resource used for this overhead, divided by
the item quantity. These figures are entered on the Overhead Details window.
For example, if you specified LABOR at $5.00 per hour as the overhead resource,
and the overhead quantity is .25 hours, this field equals .25 multiplied by 5.00, or
$1.75.
Viewing Routing Costs

For each resource, the component class, analysis code, and the component cost from the
resource is listed. For actual cost types, routing details from the closed batches used by
the actual cost process are displayed here. The resources are those defined in the
routing operations for the routings used in each batch from which actual costs are
calculated.
Prerequisites
To include operation and routing costs in your product costs, routes must be assigned
to the product. To do this, you need to set up operations, include the operations in
routings, create a formula effectivity record for the product, and include the routing in
the formula effectivity record. A batch must have already been run in which the routing
resource was used as a component cost.
Note: Formula operations, routings, and effectivities are explained in

the OPM Product Development User's Guide.
To view the routing costs:

2. Retrieve the Cost Details of the product using either the View Find All option or by
entering a wildcard value with Query Enter.
3. Select Routing Details from the Actions menu.
4. Item displays the item for which the routing and recipe display.
5. Routing Number displays the routing code associated with the highlighted routing

line for which costs are shown.
6. Version displays the routing version associated with the highlighted routing line for
which costs are shown.
7. Recipe Number displays the recipe number.
8. Version displays the recipe version number.
9. Resource displays the resource used for this routing.
10. Component Class Code displays the cost component class used to cost this
resource.
11. Analysis Code displays the analysis code used to cost this resource.
12. Component Cost displays the cost associated with this resource (cost to produce
one unit of this product). For example, if this routing is assigned to the production
of Blue Paint, and the unit of measure for Blue Paint is gallons, the cost shown is
that to produce one gallon of Blue Paint.
13. Displays the number of times this resource is used in the production of the item in
the Resource Count field.
14. Displays the amount for the resource used in the Resource Usage field.
15. UOM displays the primary unit of measure of the item.
Using Actual Cost Adjustments

This option lets you adjust the final calculated actual cost of a raw material or product
based on quantity and unit cost. Actual costs are recalculated based on the adjustments
that you enter for the specified item, inventory organization, cost calendar, and cost
period.
Value adjustment is done on the sum of prior period end inventory onhand balance and
current period transactions. Transactions like Create Immediate and Adjust Immediate
are not considered in cost calculations. For such transactions you can use average cost
adjustment.
To use actual cost adjustments:

1. Navigate to the Actual Cost Adjustments window.
2. Item represents the item for which you are entering cost adjustments. This may be a
raw material, coproducts, by-product, intermediate, or product. Required.

3. Enter the cost Calendar to which the adjusted actual costs for the item will be
updated. Required.
4. Indicate the Period within the cost calendar to which the adjusted actual costs for
the item will be updated. Required.
5. Cost Type must be an actual cost type.
Actual Cost Adjustment Details

6. Lets you choose the type of cost adjustment in Adjustment Type. The options are:
• Average Cost Adjustment
• Value Adjustment
• Unit Cost Adjustment
7. Enter the Component Class code being adjusted. For example, if you are adjusting
the actual cost of raw materials, then enter the component classification code for
raw materials. You may also specify a component class that was specifically defined
for actual cost adjustments.
8. This is the cost Analysis Code used to further define the specific adjustment.
9. Enter the Quantity of the item for which you are adjusting actual costs.
10. Enter the unit of measure in which the specified item's actual costs are being
adjusted in UOM. This can be any unit of measure that can be converted to the
item's unit of measure.
11. Specify the new unit Cost for the item in this inventory organization, calendar, and
period.
12. Enter the Reason Code that defines the nature of the actual cost adjustment you are
making.
13. Click the Subledger Entry to choose whether a subledger entry is created for the
adjustment.
Based on the Reason Code selected, the Subledger Entry defaults what was selected
for the adjustment reason code. For example, if the specified adjustment reason
code was selected as a reason code with the Subledger Entry option enabled on the
Actual Cost Adjustment Codes window, then this field is automatically enabled.
14. GL Transaction Date Indicates the GL transaction date used by the Accounting
process for creating accounting entries for adjustments. If the Subledger Entry
option is selected, then the GL Transaction Date is enabled and defaults to the start

date of the selected calendar and period. If the Subledger Entry option is not
selected, then the GL Transaction Date is disabled and the date is set to Null.
15. One of three statuses of the costing adjustment displays automatically in

Adjustment Status. The statuses are listed:
• Not Applied - This is the initial status applied to the adjustments
• Applied - This indicates that the adjustments have been "picked up" by the
Actual Costing process and have been used in the cost calculation.
• Modified - This indicates that the adjustments have been modified after they
have been applied to actual costs.
Actual Cost Adjustments - Additional Menu Features - Actions Menu

• Actual Transactions View - View transactions in a costing period used to
calculate actual costs; the most recent actual costing transactions display first.
You can also view actual cost transactions from the previous period.
Zero Activity/Quantity Adjustments in Actual Costing

The existing OPM Actual Costing process only considers the Receipt, Invoice,
Production or Consumption of items as transactions or Activities applicable for that
item. You can alter the cost after it is calculated based on transaction records using the
Expense Allocations and Cost Adjustments functionality.
Currently, the OPM Actual Costing process does not consider certain transactions or
other inventory monetary amount changes. For example, an adjustment to the
Inventory where only the monetary amount is known but not an associated quantity,
such as Inventory write-offs or other one time charges. These transactions affect the cost
of the items and they should be accounted for in the cost. With the existing
functionality, you could use the Actual Cost Adjustments to capture these activities in
OPM. But the Actual Cost Adjustments do not impact the cost of an item if:
• There is no other Activity to impact the costing calculations
• The quantity specified for the adjustment is zero
The Actual Cost process includes the following adjustments in cost calculation:
• Even if there is no other Activity for an Item
• With only the amount specified and a zero quantity. In this case the amount is
considered for the entire transaction quantity of that item.
Cost Adjustments Calculation Changes

The following topics explain how the Cost Adjustments with no activity and zero

quantity is calculated:
Calculating Cost Adjustments when there is no activity
OPM tries to get Cost Adjustments entered using the Actual Cost Adjustments window
even if there is no activity for that Item in the current period. The Actual Cost process
uses the adjustment quantity and the amount you entered along with any previous
period balance (in the case of PMAC) to derive the cost. The adjustment calculation is
done before costing the product so that the ingredient costs are reflected accurately in
the product cost and also before any GL Expenses are allocated. The Zero Activity Cost
Adjustments calculations will be performed regardless of any costing method. The
following is an example of Zero Activity Cost Adjustments calculation.
Example
In this example there is no Activity in the current period except Adjustments as shown
below:
Cost Component Analysis Code Adjustment Cost

Quantity
MATERIAL ADJ 50 0.75
Prior Period Costing data:

• Inventory Balance = 1000 units
Previous Period Unit cost
Cost Component Analysis Code Cost
MATERIAL ADJ 1.25
The cost of the Item calculated as per this design would be:
PMAC Cost = [(1000 * 1.25) + (50 * .75)] / (1000 + 50) = 1.2262
PWAC Cost = 50 * .75 / 50 = .75
Calculating Cost Adjustments with Zero Quantity
As an extension to the Zero Activity Cost Adjustments feature, any Adjustments are
also selected even if the quantity is zero. The only limitation is that the cost specified
with a zero quantity is applied to the entire Item Transaction Quantity for the period
concerned and not to a per unit cost. This is displayed as a message whenever you
specify zero in the Adjustment Quantity field on the Actual Cost Adjustments window.
The calculations are again performed before costing the products.
In either case, if any adjustment cannot be applied because of the total transaction
quantity being zero, a warning message is displayed that the adjustment could not be

applied. The following is an example of Zero Quantity Cost Adjustments calculation.
Example
In this example there is Activity in the current period. The Batches and PO Receipts are
500 Units, Cost is 1.10 per Unit and Adjustment is as shown below:
Cost Component Analysis Code Adjustment Cost

Quantity
MATERIAL ADJ 0.0 -250.00
Prior Period Costing data:

• Inventory Balance = 1000 units
Previous Period Unit cost:
Cost Component Analysis Code Cost
MATERIAL ADJ 1.25
The Cost of the Item is calculated as follows:

PMAC Cost = (1000 * 1.25) + (500 * 1.10)] / [1000 + 500] = 1.20, the adjustment is ignored.
PWAC Cost = [(500 * 1.1) + (-250)] / 500 = 0.60
The cost of the Item calculated as per the design would be:
PMAC Cost = [(1000 * 1.25) + (500 * 1.10)] + (- 250)] / [1000 + 500] = 1.03
PWAC Cost = [(500 * 1.10) + (-250)] / 500 = 0.60

5
Using Lot Costing
This topic describes how to set up and use lot costing.

• Requirements
• Understanding Lot Costing
• Transactions Affecting Lot Cost
• Setting Up Lot Cost Items
• Defining Lot Cost Overheads
• Running the Lot Cost Process
• Viewing the Lot Cost Details
• Using Lot Cost Adjustments
• Lot Costing Examples
Requirements
How is lot cost different from Standard or Actual Cost?

Lot Costing is a perpetual form of costing unlike standard or actual costs that are
periodic in nature.
Lot Costing compared with Standard or Actual Cost
Lot Costing is a perpetual form of costing unlike standard or actual costs that are
periodic in nature. The lot costs do not have cost calendar and period. Once the cost of a
lot is identified, it remains the cost of the lot until the entire lot is consumed or another
receipt or batch yield is created for the same lot. When a lot is received or yielded from
a batch again, the previous cost of the lot and the current onhand quantity of the lot is
averaged with the new receipt or batch yield quantity and cost to arrive at the new cost
of the lot.
Using Lot Costing 5-1

Lot cost records and maintains the cost of raw materials and products. In cases where
items are maintained in lots with varying attributes, the need arises to record and
maintain the costs of the items on a per lot basis to accurately reflect the variations
among different lots. Lot costing lets you calculate and store costs at the lot level. In
other words, every lot has a unique cost associated with it and that lot retains this cost
until the entire lot is consumed. The lot costs are computed on a perpetual basis unlike
the existing periodic actual costing.
Do I need to set up an alternate cost type and the start date for a lot cost type?
Yes. If you want lot costs for a specific set of items, then enter the standard cost as the
alternate cost method. The start date is the date after which all transactions are
considered for lot cost calculations.
Setting up an alternate cost method and the start date for a lot cost method
If the user desires so, Costs of only a subset of the lot controlled items can be tracked at
the lot level. For other lot controlled items and nonlot-controlled items, costs need not
be tracked in such a detail. To retrieve cost for nonlot costed items used in cost
calculations, an alternate cost method is used. If you want lot costs for a specific set of
items, then enter the standard cost as the alternate cost method.
The start date is the date after which all transactions are considered for lot cost
calculations. Choose the date carefully as it cannot be changed once lot costs are
calculated. The date must be at least a few periods behind the current date, so that all
transactions for lots currently being used are considered for cost calculations. If you set
the start date in the past (for example, several years), then the Lot Cost process tries to
select all transactions from that date and the process can take a very long time. This
results in unused lots also being costed and stored in the table and affects the
performance of the Lot Cost process.
Does cost update apply to lot costs?

The Cost Update is not necessary for lot costs.
Using Cost Update with Lot Costs
The Cost Update is not necessary for lot costs. When the Lot Cost process is run in final
mode, all transactions are marked as processed. Verify the lot costs by running the Lot
Cost process in preliminary mode. You can use the Lot Cost Adjustment to adjust costs
if needed. Then, run the Lot Cost process in final mode.
Are invoices and allocation considered by lot costs?

No. Lot costs do not consider invoices and expense allocations.
Invoices in Lot Costs
The Lot Cost process does not consider invoices.

Are invoices and allocation considered by lot costs?
No. Lot costs do not consider invoices and expense allocations.
Expense Allocations in Lot Cost
The Lot Cost process does not consider expense allocations.
Does lot cost process consider partially completed batches?

The Lot Cost process considers completed inventory transactions for products to
calculate costs. Lot cost process does not consider WIP batches and considers only
Completed or Closed batches.
Can I view lot costs?

Yes. Use the Lot Cost Details window or the Lot Item Cost Detail report.
Viewing Lot Costs
After lot costs are calculated, view them using the Lot Cost Details window or the Lot
Item Cost Detail report. The Lot Cost Details window is similar to the Cost Details
window and includes lot and sublot fields instead of calendar and periods. The Lot
Item Cost detail report prints a detailed component level cost information. Refer to
"OPM Lot Cost Detail Report" in this guide for more details.
Can I determine what transactions led to the calculated lot cost?

Yes. Run the Lot Cost History report to view the transactions that contributed to the lot
cost.
Transactions affecting calculated lot costs
Run the Lot Cost History report to view the transactions that contributed to the lot cost.
This report displays all the transactions that contributed to the lot cost as well as any
consumption transactions that affected the onhand balance for this lot. Refer to "OPM
Lot Cost History Report" in this guide for more details. Due to the nature of the
calculations and how costs are stored, you cannot query the lot actual costs using the
View Actual Cost Transactions window. The Lot Cost History report provides all the
details.
Should I enable the Automatic Step Quantity Calculation?

If the batch has multiple steps with step dependencies and the ingredients or products
have different unit of measures that belong to different unit of measure types, then
enable the Automatic Step Quantity Calculation option.
Enable Automatic Step Quantity Calculation
If the batch has multiple steps with step dependencies and the ingredients or products

have different unit of measures that belong to different unit of measure types, then
enable the Automatic Step Quantity Calculation option. The Automatic Step Quantity
Calculation ensures that all material lines are associated to one or more steps and
conversions between the items and the various step quantity unit of measures are
available.
If the Automatic Step Quantity Calculation is not enabled, then associate all material
lines with one or more steps for accurate cost determination.
What happens if one or more material lines are not associated to batch steps or do not
have any material-step associations at all?
If one or more ingredients are not associated to step, then those ingredients are added at
the first step. If one or more products or byproducts are not associated to any step, then
those items are considered yielded at the last step.
If there is no material-step association, then all ingredients are added at the first step
and all products or byproducts are considered yielded at the last step.
Understanding Lot Costing

Lot costing, also referred to as lot-based costing is a Specific Identification type costing.
Oracle Process Manufacturing lets you maintain standard and actual item costs by
inventory organization. In cases where items are maintained in lots with varying
attributes, the need arises to record and maintain the costs of the items on a per lot basis
to accurately reflect the variations among different lots. Lot costing lets you calculate
and store costs at the lot level. In other words, every lot has a unique cost associated
with it and that lot retains this cost until the entire lot is consumed. The lot costs are
computed on a perpetual basis unlike the existing periodic actual costing.
The cost of a lot can vary over time. For example, material can be received into the same
lot several times but the costs of the raw material might be different each time. In this
case, the lot cost is the weighted average of the existing and new costs. The cost of a
manufactured lot can also vary, depending on the costs of the ingredient lots, and also
the resource costs, at the time of production. In case of inter-organization transfers Lot
costing does not include transfer charges in the item/lot cost calculations, when they are
calculated in the receiving organization.
Lot costing involves tracking the cost of a lot from its initial creation through all
consumptions and replenishments.
Transactions Affecting Lot Cost

The lot cost is calculated as either raw material cost or product cost. The transactions
that affect the Lot Cost of an item are:
• Purchase Order Receipts (at PO Price)

• Production Batches yields (at the cost of the batch)
• Incoming Inventory Transfers (at cost of the source inventory organization)
• Incoming Internal Orders (at the cost of the source inventory organization)
• Lot Split, Lot Merge, and Lot Translate
The transactions are explained in the "Using Actual Costing" topic and are similar to the
way actual costs are calculated.
Support for Lot Split, Lot Merge, and Lot Translate

• Lot Split - You can divide a lot into any number of child lots. When a lot is split into
multiple children, the costs allocated to the starting lot are reallocated to the
resulting lots, that is, all child lots inherit the cost of starting lot. The Lot cost
process considers lot split transactions for process organizations and stores cost for
resulting lots into lot costing tables.
• Lot Merge - Multiple lots with identical attributes are combined to create a single
lot. The Lot cost process performs weighted average cost of multiple merged lots
based on onhand quantities to arrive at the cost of single merged lot.
• Lot Translate - Lot translate moves items from one lot to another. Selected number
of lots are moved into another lot and renamed in the target lot. Complete
inventory is moved into another lot when a lot is moved. For example, if lot
translate is used to move from lot A to lot B, then all the inventory in lot A is moved
to lot B.
Setting Up Lot Cost Items

Use this window for setting up items that are costed on a lot basis.
If an item has to be costed by lot or if all items that belong to an item cost category need
to be costed by lot, then enter the appropriate item or item cost category.
Only lot-controlled items are available here. If an item cost category is entered, then all
items that are lot-controlled and belong to the item cost category are used for lot
costing.
To set up lot cost items:

1. Navigate to the Lot Cost Items window.
2. Enter or select the Legal Entity for which you want to select items or item cost
categories that are to be costed on a lot basis. Required.

Note: The Context Organization's master organization is used for
the item validation.
3. Enter the Lot Cost Type for which you want to select items or item cost categories
that are to be costed on a lot basis. Required.
Details
4. Enter Cost Category.
5. Enter the Item.
6. Save.
Defining Lot Cost Overheads

Use the Lot Cost Overheads window to set up and maintain overheads. A overhead is a
cost associated with a resource other than the resource usage assigned in the routing.
Prerequisites
The following fields are required on the Lot Cost Burden window and must be set up
prior to defining overheads. The application where each field is set up displays in
parentheses:
• Inventory Organization (Oracle Inventory)
• Cost Types
• Organization (Oracle Inventory)
• Resource (OPM Process Planning)
• Cost Analysis Code
To define lot cost overheads:

1. Navigate to the Lot Cost Overheads window.
2. Enter the Item code for the product or intermediate to which this lot cost overhead
is assigned.
3. Enter the appropriate cost type.

4. Select the Lot number for which the overhead cost is established. The lot can be left
blank in which case the overhead is applied on all lots for the item specified.
5. Base Currency displays the base currency of the legal entity. This field is display
only.
Overhead Details
6. Enter the code for the Resource overhead. For example, if the product Blue Paint
uses MIXER1 as a resource, and you are assigning a overhead for cleanup after each
use of MIXER1, enter the code for MIXER1.
7. Enter Component Class Code you defined as overhead usage for this resource.
8. Enter the Analysis Code under which this overhead appears in cost details.
9. Enter the number of this resource used in the production of the item in Resource
Count. For example, if it takes one laborer to cleanup MIXER1 after each use, enter
1 (laborer). This number will be multiplied by the Resource Usage number to
determine the total resource usage.
10. Enter the amount of the resource used for this overhead in Resource Usage. For
example, if it takes one laborer .25 hours to cleanup MIXER1 after each use, enter
.25.
11. Enter the unit of measure in which this resource is yielded in Resource UOM.
12. Enter the quantity of the item for which the resource usage is specified in Item
Quantity.
13. Enter the Item Unit of Measure in which this overhead is measured (for example,
pounds).
14. Enter the date range in which these overheads are applicable in Effective Date
(From and To).
Running the Lot Cost Process

The Lot Cost process calculates and stores the lot level costs of items. The process
retrieves all the transactions that are applicable and processes them in the order in
which the items were replenished or consumed.
It is run for a legal entity and lot cost type. Additional parameters can be specified. If
you have enabled landed cost management functionality for your organization, then the
Lot Cost Process considers the estimated and actual landed cost adjustments in cost
calculations and updates the cost information in the Lot Cost Adjustments window.

To submit the Lot Cost Process:
1. Navigate to the Lot Cost Process window.
2. Enter the Legal Entity for which you want to run the Lot Cost process.
3. Enter the appropriate lot Cost Type.
4. Indicate whether the process should run in final mode (Yes) or not (No) in Final
Run . The default value is No. If the mode is final, then after cost calculations, all
inventory transactions used in cost calculations are marked as lot costed. You
cannot change lot costs once they are processed in final mode. Set Final Run to no to
run the process in the test mode and verify costs. Once costs are correct, run the Lot
Cost process in final mode.
5. Enter the Cost Category for which you want to run the process. The process
calculates lot costs for all lot controlled items that belong to this item costs class and
specified as lot costed in the Lot Cost Items window. You enter this field when the
process is run in test mode or for diagnostic purposes. Leave this field null when
running this process in actual or final mode.
6. Enter the Process Organization.
7. Enter the Item for which you want to run the Lot Cost process. Any item that is lot
controlled and specified as lot costed can be selected here. You enter this field when
running the process in test mode or for diagnostic purposes. Leave this field null
when running this process in actual or final mode.
8. Enter the Lot Number. It is applicable only when a specific item is selected. Only
valid lots for this item can be selected.
9. Enter the Lot Cost Date. Defaults to the current system date.
10. Click Ok.
Viewing the Lot Cost Details

This window is used to inquire the lot costs of items. You can query the cost of a single
item or lot or perform various other queries. The window is view only as you cannot
enter a lot actual cost directly for an item.
If there are overheads attached to the item or lot, or if the item is a product and is
produced from multiple ingredients, then for a given item or lot there could be multiple
detail rows.
Prerequisites

• Run the Lot Cost Process.
To view lot costs:

1. Navigate to the Lot Cost Details window.
2. Query by entering one or more values for the fields or use the Query-Find window.
3. Displays the Item code for which you are inquiring costs in the field.
4. Displays the Lot Cost Type .
5. Displays the Lot number for which you want to see the costs in .
6. Displays the date in Cost Date. If a lot is received or otherwise replenished more
than once in the same inventory organization, then the costs before and after the
receipt are both stored in the lot costs table. This cost is used for audit, and display
and reporting purposes.
7. Displays if it is a Final Cost run.
8. Displays the item's Total Cost in the item's primary unit of measure.
Details
9. Displays the Component Class Code. When displaying costs for a formula item,
ingredient, or product, this field displays the component class associated with the
cost shown on this line.
10. Displays the Description of the component class code.
11. When displaying costs for a formula item, ingredient, or product, the Analysis Code
associated with the cost shown on this line displays.
12. If you are displaying costs for a formula item, ingredient, or product, the Cost
Component Class shown on this line displays.
Lot Cost Details Window Menu Features - Actions Menu
• Lot Item Cost Detail Report - Use this report to list costs generated by the Lot
Cost process. You can verify the calculated costs. Refer to "OPM Lot Cost Detail
Report" for more details on running this report.
• Lot Costing History Report - Use this report to view the lot history to analyze
how costs are calculated. A history of item and lot is maintained for costing
purposes. Refer to "OPM Lot Cost History Report" for more details on running
this report.

Using Lot Cost Adjustments
This window lets you adjust the final calculated lot cost of a raw material or product
based on the unit cost. Lot costs are recalculated based on the adjustments that you
enter for the specified legal entity, item, inventory organization, lot, child lot, and
adjustment date.
These adjustments directly alter the cost of an item. This approach produces a complete
adjustment audit trail.
Prerequisites
To use the lot cost adjustments:

1. Navigate to the Lot Cost Adjustments window.
2. Enter the item for which you are entering lot cost adjustments in the Item field. This
may be a raw material, byproduct, intermediate, or product.
3. Enter the Cost Type.
4. Enter the Lot to which the cost adjustment must be applied.
5. Displays the reference number.
6. Enter the Reason Code that defines the nature of the lot cost adjustment.
7. Enter the date on which the cost adjustment is applied in Adjustment Date. It is set
to the system date by default. This date must be greater than the date of the last
transaction processed by the Lot Cost process final run.
8. Select the Adjustment Status. One of two statuses of the costing adjustment displays
automatically. The statuses are:
• Not Applied - This is the initial status applied to the adjustments
• Applied - This indicates that the adjustments are "picked up" by the lot costing
process and used in the cost calculation.
Lot Cost Adjustment Details

9. Enter the Component Class code for the component being adjusted. For example, if
you are adjusting the actual cost of raw materials, then enter the component
classification code for raw materials. You may also specify a component class that
was specifically defined for actual costs.

10. Enter the cost Analysis Code used to further define the specific adjustment.
11. Enter the new unit cost for the item in this legal entity, inventory organization, and
lot in Cost Adjustment .
Lot Costing Examples

In the following examples, Inv Org refers to inventory organization, Qty refers to
Quantity, and Trans-Date refers to Transaction date.
Example 1: A Purchase Order Receipt Created for Item A, Lot 1

This example shows a purchase order receipt created for Item A, Lot 1. The following
table shows a purchase order receipt created for Item A, Lot 1, with quantity 100 at the
price of $3.00 on January 1, 2004.
Transaction Item Lot Inv Price Qty Trans- Comments

Org Date
PO Receipt A L1 W1 3.00 100 01-Jan-04 Cost is the PO price

and cost component
and analysis code
are from the
Material Cost
Components table
If the item or item cost category specific material component cost and analysis code is
not found in the Material Cost Components table, then the application defaults to the
fiscal policy values.
Lot Cost Details

The following table displays the lot cost details:
Item Lot Inv Org Cost Date Cost Analysis Component

Component Code Cost
A L1 W1 01-Jan-04 C1 N1 3.00
Example 2: A Second Purchase Order Receipt Created for Item A, Lot 1

This example shows another purchase order receipt created for Item A, Lot 1. The
following table shows another purchase order receipt created for Item A, Lot 1, with

quantity 100 at the price of $4.00 on January 5, 2004.
Transaction Item Lot Inv Price Qty Trans- Date Comments

Org
PO Receipt A L1 W1 4.00 100 05-Jan-04 Cost is the PO

price and cost
component and
analysis code
are from the
Material Cost
Components
table
Note that, if the item or item cost category specific material component cost and
analysis code is not found in the Material Cost Components table, then the system
defaults to the fiscal policy values.
Lot Cost Details


Component Code Cost
A L1 W1 01-Jan-04 C1 N1 3.00
A L1 W1 05-Jan-04 C1 N1 3.50
Example 3: Consumption of Item A, Lot 1

This example shows consumption of Item A, Lot 1. The consumption includes,
inventory adjustment, OM shipments, production ingredient consumption, or inventory
transfer from the inventory organization.
The lot cost remains the same but the onhand is reduced appropriately. If a
miscellaneous transaction is recorded when there is already an existing onhand, then it
is processed like an adjustment.
Example 4: A Purchase Order Receipt Created for Item A, Lot 2 with Freight and Special
Charges
This example shows a purchase order receipt created for Item A, Lot 2 with freight and
special charges. The following table shows a purchase order receipt created for Item A,

Lot 2, with quantity 100 at the price of $4.00 on January 1, 2004.

Org

price and cost
component and
analysis code are
from the Material
Cost Components
table
The following table shows the details of acquisition costs:
Code Cost Component Analysis Code Unit Cost Include or

Exclude
Freight C2 N2 0.10 Include
Insurance C3 N3 0.05 Exclude
Note that, any excluded acquisitions are not included in the item cost.
Lot Cost Details


Component Code Cost
A L1 W1 01-Jan-04 C1 N1 4.00
A L2 W1 01-Jan-04 C2 N2 0.10
In this case, the unit cost is calculated as $4.10 by adding the component costs.
Example 5: A Second Purchase Order Receipt Created for Item A, Lot 2 with Different
Freight and Special Charges
This example shows a purchase order receipt created for Item A, Lot 2 with different
freight and special charges. The following table shows a second purchase order receipt
created for Item A, Lot 2, with 100 quantity at the price of $5.00 on January 5, 2004.

Org

price and cost
component class
and analysis code
are from the
Material Cost
Components table
The following table shows the details of acquisition costs:
Code Cost Component Analysis Code Unit Cost Include or

Exclude
Freight C2 N2 0.15 Include
Insurance C4 N4 0.10 Include
Lot Cost Details

Item Lot Inv Cost Date Cost Analysis Component

Org Component Code Cost
A L2 W1 01-Jan-04 C1 N1 4.000
A L2 W1 01-Jan-04 C2 N2 0.100
A L2 W1 05-Jan-04 C1 N1 4.500
A L2 W1 05-Jan-04 C2 N2 0.125
A L2 W1 05-Jan-04 C4 N4 0.050
In this case, the unit cost is calculated as $4.675 by adding the third, fourth, and fifth
component cost rows.

Associated
This example shows a purchase order receipt created for Item A, Lot 5 with overhead
associated. The following table shows a purchase order receipt created for Item A, Lot 5,
with 100 quantity at the price of $5.00 on January 5, 2004.
Transaction Item Lot Inv Price Qty Trans- Comments

Org Date
PO Receipt A L5 W1 5.00 100 05-Jan-04 Cost is the PO price

and cost component
and analysis code are
from the Material
Cost Components
table
The following table shows overhead details:
Resource Cost Component Analysis Code Burden Factor Resource Cost
Freight C2 N2 0.10 1.00
Lot Cost Details


Component Code Cost
A L5 W1 05-Jan-04 C1 N1 5.00
A L5 W1 05-Jan-04 C2 N2 0.10
In this case, the unit cost is calculated as $5.10 by adding the component costs.
Example 7: Another Purchase Order Receipt Created for Item A, Lot 5 with Overhead
Associated
This example shows a purchase order receipt created for Item A, Lot 5 with overhead
associated. The following table shows a purchase order receipt created for Item A, Lot 5,
with 100 quantity at the price of $5.00 on January 5, 2004.

Transaction Item Lot Inv Org Price Qty Trans- Date Comments

price and cost
component and
analysis code
are from the
Material Cost
Components
table
The following table shows overhead details:
Resource Cost Analysis Code Burden Factor Resource Cost

Component
Freight C2 N2 0.10 1.00
Lot Cost Details


Component Code Cost
A L5 W1 05-Jan-04 C1 N1 5.00
A L5 W1 05-Jan-04 C2 N2 0.10
A L5 W1 05-Jan-04 C1 N1 5.50
A L5 W1 05-Jan-04 C2 N2 0.10
In this case, the unit cost is calculated as $5.60 by adding the third and fourth
component cost rows.
Example 8: Purchase Order Corrections and Returns

The purchase order corrections and returns work the same as the purchase order
receipts except that the quantity is taken with the proper sign to maintain the balance
properly.

Example 9: Batch Cost Calculation
This example shows batch cost calculation in lot costing. The following diagram
illustrates that the ingredient lines of apples and oranges are associated to the step 10,
water is associated to Step 20, juice to Step 30, and jelly and peels are associated to Step
40.
In this example as shown in the diagram, apples, oranges, waters, and jars are used to
produce juice and jelly. The byproduct is peels.
Set up these associations in the Batch Step/Batch Item Association window. The step
sequence or dependency is set up in the Batch Step Dependencies window.
Cost Calculation Logic

The step dependency and step or material association are used to decide the step
sequence.
Then, the total cost of ingredients and resources used at each step is calculated. The
costs are accumulated at each step in succession. Resource usages and step quantities
are taken from the OPM Process Execution tables.
If a product yields at any step, then the step quantity and the yield quantity are used to
arrive at the proportion of costs accumulated so far to be applied to the product yield.
This is used to calculate the unit cost of the lots yielded at that step.

The rest of the accumulated cost is carried over to the next step, and so on. At the last
step, any remaining accumulated costs are applied to products that are yielded at that
step.
To determine accurately how much of material is processed at each step, it is
recommended that you use the Calculate Step Quantity option when creating batches. If
this option is not used, then enter the actual step quantities processed at each step. If the
actual step quantity is not recorded properly, then the costs calculated may not be
accurate.
Using the above logic, the costs are calculated as follows:
Costs accumulated at Step 10:
Equals 100 pounds of apples at $3.00 per pound + 100 pounds of oranges at $4.00 per
pound + Mixing Cost.
• Step Quantity for Step 10 = 200 pounds
Mixer usage = (200 pounds / 100 pounds per hour) = 2 hours which is 2* $10.00 per
hour = $20
Step 10 Costs = $300 + $400 + $20 = $720.

When the Calculate Step Quantity option is used, OPM Process Execution uses the unit
of measure conversion for apples and oranges between pound and gallon to maintain
the step quantities for all steps in both mass and volume units.
$720 from Step 10 + 90 gallons water at 0.10 per gallon + Blending Cost
• Step Quantity for Step 20 = 200 pounds = 100 gallons (assume a conversion rate of 1
gallon to 2 pounds of apples and oranges)
Blending Cost = (100 gallons / 100 gallons per hour) = 1 hour which is 1* $20.00 per
hour = $20
Step 20 Costs = $720 + $9 + $20 = $749

Equals $749 from Step 20 + Filtration Cost
• Step Quantity for Step 30 = 200 pounds = 100 gallons
Filtration Cost = (100 gallons / 100 gallons per hour) = 1 hour which is 1 * $30.00 per
hour = $30
Step 30 Costs = $749 + $30 = $779

50 gallons of juice, Lot A, is yielded at Step 30. The proportion of costs removed by juice
is calculated as follows:
• The 50 gallons of juice is in the same unit of measure as the step quantity unit of
measure. No unit of measure conversion is required.

The cost of juice is calculated as:
[50 gallons / Total Step Quantity] * Total Costs accumulated
which is, 50 / 100 * $779 = $389.5
The unit cost of juice, Lot A, is $389.5/50 equals $7.79 per gallon.
The remaining cost, $389.5, is carried over to Step 40.
Cost accumulated at Step 40:
Equals $389.5 from Step 30 + 90 jars at $0.10 per each + Packing costs - 10 pound peels at
$0.10 per pound
• Step Quantity for Step 40 = 50 gallons = 100 pounds
Packing Cost = (100 pounds / 100 pounds per hour) = 0.1 hour which is 0.1 * $10.00
per hour = $10.00.
Step 40 Costs = $389.5 + $9 + $10 - $1 = $407.5

The unit cost of jelly, Lot B, is $407.5/90 equals $4.528 per pound
If the Calculate Step Quantity option is not used, then the Lot Cost process performs the
unit of measure conversions between various ingredients and products to calculate the
step quantities. If any of the unit of measure conversion is not set up, then an error
displays and the batch is not costed.

6
OPM - Landed Cost Management Integration
Understanding OPM - Landed Cost Management Integration

Oracle Landed Cost Management (LCM) enables organizations to gain insight into the
real costs associated with acquiring products. Landed cost is the cost to "land" a product
on the buyer's final location. These costs are initially estimated and then updated with
actual amounts, as they become known, allocating them to shipments, orders, and
products. Landed costs may include costs like freight, storage, taxes, and handling. Cost
methods and inventory valuations are accurately maintained providing better visibility
into an individual product's profitability and an organization's outstanding exposure.
The OPM-LCM integration provides better insight for product forecasting and
budgeting, and provides clear evidence of the detailed accumulation of expenses for
regulatory requirements and reporting. You must set an organization as LCM-enabled
on the Organization Parameters window in Oracle Inventory to use the LCM
functionality.
Note: If you want to use the Freight and Special charges functionality in
Release 12.1, then you must setup the RCV: Freight and Special
Charges Enabled profile value to Yes in the Oracle Purchasing
application.
Using Oracle Landed Cost Management, you can estimate the landed costs for items
and update their costs with the actual landed costs, as they are known. Oracle Landed
Cost Management supports two receiving flows.
• Oracle Landed Cost Management as a service: In this flow the receiving clerk
receives goods into inventory using the Oracle Purchasing application windows.
Landed costs are calculated in the LCM application.
• Oracle Landed Cost Management pre-receiving: In this flow users receive goods
from within the Oracle Landed Cost Management application windows. Charges
can be edited before the estimated landed cost is calculated and the goods are
OPM - Landed Cost Management Integration 6-1

received.
Using Oracle Landed Cost Management you can view the estimated and actual landed
costs for an item simultaneously providing valuable information about the landed cost
for an item and where cost improvements can be made.
The landed costs calculated by Oracle Landed Cost Management are passed on to OPM
and the landed costs are then included in the cost calculations performed by Actual,
Standard, and Lot Costing.
In OPM, Standard, Actual, and Lot Costing methods support LCM and the cost
adjustments are identified as:
• Estimated Landed Cost (ELC): ELC is the item landed cost calculated based on the
estimated amounts of the item price, the taxes, and the charge amounts. LCM
generates ELC adjustments for receipts.
• Actual Landed Cost (ALC): ALC is the item landed cost calculated based on the
actual amounts of the item price, the taxes, and the charge amounts. The actual
amounts are provided by the related documents, as item invoices, freight invoices
and charges. LCM generates ALC adjustments for invoices.
You must perform the following setups to be able to use the LCM functionality:
1. Set up the following LCM accounts in Oracle General Ledger:
• LCM Absorption (This account is applicable to OPM Cost Management.)
• LCM Invoice Price Variance
• LCM Exchange Rate Variance
• LCM Tax variance
• LCM Default Charge account
• LCM Cost Variance
Refer to the Oracle General Ledger User's Guide for more information.
2. Set up the following in Oracle Inventory:

• Select the LCM Enabled checkbox in the Organization Parameters - Inventory
Parameters window.
• Enter the LCM Variance account in the Other Accounts tab of the Organization
Parameters window.
Refer to the Oracle Inventory User's Guide for more information.
3. Set up the following in Oracle Purchasing:

• Select the Pre-Receiving in LCM check box in the Receiving Options window, to
indicate that you want the organization to operate with Landed Cost
Management as a pre-receiving application. This is optional.
• In the Receiving Options window, select an account from the list of values in
the fields for the following LCM accounts:
• Landed Cost Absorption
• Landed Cost Invoice Price Variance
• Landed Cost Exchange Rate Variance
• Landed Cost Tax variance
• Landed Cost Default Charge account
• Landed Cost Variance
Refer to the Oracle Purchasing User's Guide for more information.
4. Set up Modifiers and the following profile options in Oracle Advanced Pricing:
• Set the QP: Blind Discount Option to Yes
• Set QP: Licensed for Product to Purchasing
• Set QP: Pricing Perspective Request Type to Purchase Order
• Set QP: Pricing Transaction Entity to Procurement
• Set QP: Source System Code to Oracle Purchasing
Refer to the Oracle Advanced Pricing User's Guide for more information.
5. Set up Cost Factors. Refer to the "Defining Cost Factors" topic for more information.
6. Set up Shipment Line Types, Shipment Types, and the following profile options in
Oracle Landed Cost Management:
• INL: Default Currency Code for QP Charges Generation
• INL: Default Currency Conversion Type for QP Charges Generation
• INL: Default Shipment Type for Open Interface
Refer to the Oracle Landed Cost Management User's Guide for more information.
7. Set up the GMF: Landed Cost Adjustments Transfer Method to Inventory In Actual

Costing profile option in OPM Cost Management. Refer to the "Setting Up" chapter
for more information.
8. Perform the following setups in SLA:

• Set the following Event Types:
• Landed Cost Adjustment Deliver
• Landed Cost Adjustment Expense Deliver
• Landed Cost Adjustment Receive
• Landed Cost Adjustment Valuation
• Landed Cost Absorption and Landed Cost Valuation accounts
Refer to the "OPM Costing - SLA Accounting Data", "Account Definitions", and "Oracle
Purchasing Distribution for Process Organization" topics for more information. You can
modify the LCA and LCV account derivation rules as required.
The journal entries for landed cost adjustments are posted in OPM Accounting
Preprocess. The changes in inventory costs due to landed cost adjustments are posted to
the Landed Cost Absorption (LCA) and Landed Cost Variance (LCV) accounts. You
must setup the LCA and LCV accounts for organizations to use LCM in the Receiving
Options window in Oracle Purchasing. Refer to the Oracle Purchasing User's Guide and
Oracle Landed Cost Management User's Guide for more information. The Actual landed
cost adjustments are stored in OPM in the Actual Cost Adjustments window.
LCM integrates with Oracle Purchasing and Oracle Payables application and supports
the following transactions:
• PO Receipts
• Delivery
• Returns and Corrections
Landed Cost Management - Accounting

The following sections explain the costing and accounting of inbound receiving
transactions (PO receipts) where the organization costing method can be Actual,
Standard, or Lot Costing:
Actual Costing
Scenario 1: Item estimate is same as PO Price, but different than Invoice price
This is the most common scenario and can be implemented in both LCM as a service
and LCM as pre-receiving flows. Let us consider Actual Costing as the cost method

used in this case.
At PO creation
• Item PO Price: $9 (invoice matching: receipt)
• Tax set up; exclusive tax: 10%; recoverable rate: 50%
At receipt
• Receipt qty = 10 each
• Item cost (estimated ): $9/ each) [ Event Fiscal Policy: Book INV at Receipt Price, No
PPV]
• Freight (estimate) : $1/ each) [ As per Charges setup]
Landed Cost calculation

• Item cost: $9/ each [ At PO Price]
• Tax (non recoverable ): $0.45/ each [ PO Price $9, Tax Rate 10%, Non-Recoverable
Rate 50%]
• Freight: $1/ each
• Estimated landed cost: $10.45/ each [ PO Price + Non-Recoverable Tax + Freight]
Invoicing
• Item Invoice comes at $110 (Item $100 + Tax $10, $5 recoverable and $5 non
recoverable)
• Freight Invoice $20
• Actual Landed Cost = $125 (Item $105 + Freight $20), Unit LC = 12.5 ($125/10 Each).
Calculated by LCM as an adjustment record and transferred to OPM repository
through the OPM Landed Cost Adjustment Import concurrent program.
• The GMF: Landed Cost Adjustments Transfer Method to Inventory in Actual

Costing profile option is set to Apply LC Adjustments based on the Period Opening
Balance option.
• On hand at the time of cost update is 5 each:

Event Type Journal Line Type Calculation Debit Credit
Receipt Receiving Inspection Qty Received x $104.5

Receipt Price
(Estimated
Landed Cost)
AP Accrual (at PO Qty Received x $94.5

Price) PO Price
(including
non-recoverable
tax)
Landed Cost Qty Received x $10

Absorption (Receipt Price -
PO Price)
Delivery Inventory Valuation Qty Received x $104.5

Receipt Price
(Estimated
Landed Cost)
Receiving Inspection Qty Received x

Receipt Price $104.5
(Estimated
Landed Cost)
Landed Cost Receiving Inspection Receipt Qty x $10 = 10 x

Adjustment [Estimated (10.45-9.45)
Receipt Landed Cost- PO
Price
Landed Cost Receipt Qty x $10

Absorption [Estimated
Landed Cost- PO
Price]
Landed Cost Receiving Inspection Receipt Qty x $10

Adjustment [Estimated
Delivery Landed Cost- PO
Price]

Landed Cost- PO
Price]

Landed Cost Landed Cost Period Opening $10.1

Adjustment Absorption Bal Qty x
[Estimated
valuation Landed Cost- PO
Price]
Inventory Valuation Period Opening $10.1

Bal Qty x [Actual
Landed Cost-
Estimated
Landed Cost]
Landed cost Unabsorbed $0

Variance value of the
Landed Cost
Scenario 2: Landed costing with returns

Let us now consider a procure to pay cycle with returns. Consider that you receive and
deliver full quantity to Inventory, the supplier sends an invoice, and you create invoice
and make payment. You then find that some goods are defective in the inventory. So
you return goods and then create debit note for the return quantity.
At PO creation
At receipt
• Item cost (estimated) : $9/ each
• Freight (estimate) : $1/ each

• Item cost: $9/ each
• Tax (non recoverable) : $0.45/ each
• Estimated landed cost: $10.45/ each

Invoicing
recoverable), and
• Actual Landed Cost = $125 (Item $105 + Freight $20), Unit LC = 12.5. (Calculated by
LCM that creates a record in costing interface which is processed by OPM costing to
create adjustments)
Returns
• Consider that 5 units of goods are rejected and sent back to the supplier (assume
that you do not recover inbound transport/charges incurred while procuring the
material from supplier)
Actual Item Invoice = $11 ($10 item price, $0.5 recoverable and $0.5 non recoverable
tax)
Event Type Journal Line Calculation Debit Credit

Type
Return to Accrued Return Qty x PO $47.25(5 x 9.45)

Vendor For Accounts Payable Price
Items:
Receiving Return Qty x $52.5(5 x 10.5)

Inspection Receipt Price
Landed Cost Return Qty x $5.25

Absorption (Receipt Price-
PO Price)
Return to Receiving Return Qty $5

Vendor Inspection Charge
For Charges:
Landed Cost Return Qty $5

Absorption Charge
Return to Inventory Return Qty x $52.5(5 x 10.5)

Receiving Valuation Receipt Price

Event Type Journal Line Calculation Debit Credit
Type
Receiving Return Qty x $52.5(5 x 10.5)

Inspection Receipt Price
Standard Costing
Scenario : Item estimate is same as PO Price, but different than Invoice price
At PO creation
At receipt
• Item cost (estimated) : $9/ each
• Freight (estimate) : $1/ each

• Item cost: $9/ each
• Tax (non recoverable) : $0.45/ each
• Estimated landed cost: $10.45/ each
Invoicing
recoverable), and
• Actual Landed Cost = $125 (Item $105 + Freight $20), Unit LC = 12.5. (Calculated by
LCM that creates a record in costing interface which is processed by OPM costing to
create adjustments)

Receipt Receiving Inspection Qty Received x $104.5

Receipt Price
(Estimated
Landed Cost)
AP Accrual (at PO Qty Received x $94.5

Price PO Price
(including
non-recoverable
tax)
Landed Cost Qty Received x $10

Absorption (Receipt Price -
PO Price)
Delivery Inventory Valuation Qty Received x $104.5

Receipt Price
(Estimated
Landed Cost)
Receiving Inspection Qty Received x $104.5

Receipt Price
(Estimated
Landed Cost)
Landed Cost Receiving Inspection Receipt Qty x $10 = 10 x

Adjustment [Estimated (10.45-9.45)
Receipt Landed Cost- PO
Price

Landed Cost- PO
Price]
Landed Cost Receiving Inspection Receipt Qty x $10 = 10

Adjustment [Estimated (10.45-9.45
Delivery Landed Cost- PO
Price]

Landed Cost- PO
Price]

Using LCM as a Pre-Receiving Application
You can use Oracle Landed Cost Management as a pre-receiving application when
estimation of the landed cost is required before the receipt of the item by the Receiving
application. You must select the Pre-Receiving in LCM checkbox in the Receiving
Options window of the Oracle Purchasing application in order to use LCM as a
pre-receiving application. After the estimated landed cost is finalized in Landed Cost
Management, the information is passed to Receiving during the receipt of the item
based on the Landed Cost Management shipment. The receipt is performed using the
known estimated landed cost. Receiving transactions are generated in the Receiving
application and passed on to the OPM Cost Management.
After invoices are created and matched to the receipt of the item in Oracle Payables the
actual price information is passed to Landed Cost Management using the concurrent
Matches Interface Import concurrent program and by submitting the Submit Pending
Shipments window. Using Landed Cost Management pages the actual landed cost for
the shipment can be viewed and analyzed with the estimated landed cost information.
Refer to the Oracle Landed Cost Management User's Guide for more information.
The Landed Cost Adjustments Import process is then run to transfer the LC
adjustments to the OPM costing processes. The following figure describes the process
flow when you use LCM as a pre-receiving application:

Using LCM as a Service
When Oracle Landed Cost Management is used as a service after the receipt of items
into inventory, the Landed Cost Management shipment is automatically created. The
estimation of the item landed cost is also automatically calculated based on the
purchase documents price and the charge amounts given by Advanced Pricing.
Landed Cost Management calculation and integration processes are performed using
two concurrent programs (Landed Cost Integration Manager and Shipment Interfaces
Import), which can be run or scheduled to run on a periodic basis.
The actual landed cost calculation is based on the information collected from Payables
invoices and are not changed in this scenario. While viewing this cost information they
can analyze and compare the difference between the estimated and actual landed costs.
This information provides valuable insight into the costs of items.
After invoices are created and matched for the receipt of the item in Oracle Payables
that actual landed cost information is passed to Landed Cost Management using two
concurrent programs (Matches Interface Import and Submit Pending Shipments). Using
the Shipments Workbench the estimated landed cost can be viewed for the shipment
after the Landed Cost Integration Manager and Shipment Interfaces Import concurrent
programs have completed successfully. Refer to the Oracle Landed Cost Management
User's Guide for more information on the concurrent programs.

Then, run the Landed Cost Adjustments Import process to import the landed cost
adjustments into the OPM transaction tables. The landed cost adjustments are then
included in item cost calculations by the following:
• Actual Cost Process, Lot Cost Process, and Standard Cost Rollup
• Cost Update
• OPM Accounting Pre-processor
• Create Accounting Program
The Detailed Subledger report displays the landed cost adjustment journal entries and
the OPM Lot Cost History report displays the history of landed cost adjustments.
You can set the GMF: Landed Cost Adjustments Transfer Method to Inventory In
Actual Costing to apply landed cost adjustments to inventory or period opening
balance. Refer to the Setting Up chapter for more information on the profile option. The
following figure describes the process flow when you use LCM as a service application:
Running the Landed Cost Adjustments Import Process

Run the Landed Cost Adjustments Import process to validate and import ELC and ALC
adjustments to OPM repository.

To run the Landed Cost Adjustment Import process:
1. Navigate to the Parameters window.
2. Enter the Legal Entity to import landed cost adjustments for transactions of a
specific legal entity. Required.
3. Enter From and To Organization as the range of organizations for which you want
to run the import process. Optional.
4. Enter From Item and To Item as the range of items for which you want to run the
import process. Optional.
5. Enter Start Date and End Date to run the process for transactions of a specific date
range.
6. Click OK then Submit.
7. Note the Request ID number.
8. Navigate to the Requests window and select the Request ID.
9. Click Log to view the process log. The process log lists the details of the LC
adjustments that were transferred to the OPM transaction tables.

7
Copying Costs
This topic describes copying item, overhead, and resource costs set up for one
organization, calendar and period, and category to another period and inventory
organization or to all periods and inventory organizations. You can use the copy
processes to quickly replicate the cost data setup across several periods and several
organizations rather than creating them one at a time in each periods and organizations
that can be very time consuming. The copy programs let you copy the costs for a set of
items or set of items belonging to a range of Item Categories or automatically modify
the copied costs by a percentage or flat value providing additional flexibility in
establishing your costs.
• Copying Item Costs
• Copying Costs Examples
• Copying Resource Costs
• Copying Fixed Overheads
• Copying Overhead Percentage
• Copy Source Organizations
Copying Item Costs

You can copy item costs from:
• One period to all periods
• One organization to another organization
• One organization to all organizations
One period to:

• all subsequent open and frozen costing periods in the same calendar or
Copying Costs 7-1

• all open and frozen periods in a different calendar
You can also update component costs while copying. You can alter the copied
component costs by a flat amount or by a percentage.
To copy item costs:

1. Navigate to the Copy Item Costs window.
Source and Target Parameters

2. Enter the inventory organization from which you are copying item cost data in
Organization Source.
3. Enter the inventory organization to which you are copying item cost data in
Organization Target. To copy cost data to all inventory organizations, leave this
field blank.
4. Click All Organizations to copy cost data to all inventory organizations in the given
legal entity. If it is checked, then the target inventory organization (inventory
organization To) is cleared.
5. Enter a valid Legal entity. The specified legal entity or organization must belong to
the specified target calendar.
6. Enter the cost calendar from which you are copying cost data in Calendar Source.
7. Enter the cost calendar to which you are copying cost data in Calendar Target .
8. You can copy cost data from one period to another or to all periods in the same or
different calendars in Period Source . Enter the cost calendar period from which you
are copying costing data.
Note: You can copy component costs from a frozen or closed period
to an open one. However, you cannot copy costs to a closed period
from an open one. You can only copy new item costs into a frozen
period.
9. Enter the cost calendar Period Target to which you are copying cost data. To copy
costing data to all periods, leave it blank.
from an open one. Only new item costs are copied.
10. Click All Periods to copy cost data to all subsequent open or frozen periods in a

given calendar. If this box is checked, then the target period (Period Target) is
cleared.
11. Enter the Cost Type Source code from which you are copying costing data. Cost
type codes are defined using the Cost Type Codes window.
12. Enter the cost type code to which you are copying costing data in Cost Type Target.
Cost type codes are defined using the Cost Type Codes window.
When you try to copy costs to Actual Cost type, a warning displays. When you run
the Actual Cost process, all the copied costs are deleted.
13. Select the Copy Costs from Lower Level at Source to This Level in Target option to
copy the cost components from the Lower Level at source to This Level in target.
14. To restrict the copy to a range of items, enter the opening end and the closing end of
the item number range in Item (From and To).
15. To restrict the copy to a range of item cost categories, specify the opening end and
the closing end of the cost category range in Cost Category (From and To)
Increase/Decrease
16. Indicate the Percentage % by which component costs should be increased or
decreased as a result of the copy process. For example, if you enter 10% and the cost
being copied is $1.50, the resulting cost will be $1.65
17. Indicate the monetary Amount by which component costs should be increased or
decreased as a result of the copy process in the field. For example, if you enter $.25
and the cost being copied is $1.50, the resulting cost will be $1.75.
Existing Costs
18. The Existing Costs field contains following options:
• Remove Before Copy: Select Remove Before Copy option to remove current
component costs as a result of the copy process. The current cost will be copied
based on the other criteria you have entered, but the original component cost
will be deleted.
• Replace During Copy: Select Replace During Copy option to merge the current
and copied component costs during the copy process. The resulting cost is
different from the one that was replaced.
For example, assume the current period cost of a component is $2.35, but you
want to copy $2.00 as the component cost into the next calendar period. If you
select Replace During Costs for this option, $2.00 will be copied into the next
period.
Copying Costs 7-3

Copying Costs Examples
• Example 1: Increase by 10%
Cost in Source Period Cost in Target Period after Copy
MATERIAL 2.00 MATERIAL 2.20
LABOR 1.50 LABOR 1.65
• Example 2: Increase by $0.50
Cost in Source Period Cost in Target Period after Copy
MATERIAL 2.00 MATERIAL 2.50
LABOR 1.50 LABOR 2.00
You have the choice of:

• Removing Existing Costs Before Copy
• Replacing Existing Costs During Copy
Removing Existing Costs Before Copy

This option removes all cost components within the given selection criteria before
proceeding to copy the costs. The example below illustrates what happens when cost
components already exist in the target period and a Copy Cost process is invoked with
the Remove Existing Costs Before Copy option.
Example 3:
Costs to Copy Existing Costs Result
MATERIAL 2.00 MATERIAL 2.35 MATERIAL 2.00
LABOR 1.50 LABOR 1.25 LABOR 1.50
n/a OVERHEAD 0.75 n/a

Replace Existing Costs During Copy
This option merges the cost of any existing component costs with the copied costs
during the copy and leaves the other components unchanged. The example below
illustrates what happens when cost components already exist and a Copy Cost process
is executed with the Replace Existing Costs During Copy, option.
Example 4:
Costs to Copy Existing Costs Result
MATERIAL 2.00 MATERIAL 2.35 MATERIAL 2.00
LABOR 1.50 n/a LABOR 1.50
n/a OVERHEAD 0.75 OVERHEAD 0.75
Copying Resource Costs

You can copy resource costs from:
One period to:

• all the subsequent open or frozen costing periods in the same calendar or
• all the open or frozen periods if it is a different calendar.
You can set up all of your resource costs between one period to other costing periods
and one cost type to other cost types and then copy those costs to all inventory
organizations in a legal entity rather then setting up the same data repeatedly.
Similarly, you can do this from one period to all the periods in the same or different
calendar.
Even if the actual costs for the target organization are different, it may still be more
efficient to do the following:
1. Setup the data for a source organization
2. Perform the copy to the target organization
3. Change resource costs for the target organization
Copying Costs 7-5

4. Perform a cost rollup for the target organization
Note: This window is used to copy resource costs. To copy item,

ingredient, and product costs, use the Copy Item Costs window.
To copy resource costs:

1. Navigate to the Copy Resource Costs window.
Copy Resources
2. Enter a valid legal entity in Legal Entity Source. The specified legal entity or
organization must belong to the specified target calendar.
3. Enter a valid legal entity in Legal Entity Target.
4. Enter the organization from which you are copy resource cost data in Organization
Source.
5. Enter the organization to which you are copying resource cost data in the
Organization Target field.
6. Click All Organizations to copy resource cost to all inventory organizations in the
given legal entity. If it is checked, then the target inventory organization (inventory
organization To) is cleared.
7. Enter the cost calendar from which you are copying resource cost data in Calendar
Source. Cost calendars are set up using the Cost Calendar window.
8. Enter the cost calendar to which you are copying resource cost data in Calendar
Target.
9. Enter the cost calendar period from which you are copying resource cost data in
Period Source.
10. Enter the cost calendar period to which you are copying resource cost data in
Period Target. To copy costing data to all periods, leave it blank.
from an open one.
11. Click All Periods to copy resource costs to all subsequent open or frozen periods in
a given calendar. If it is checked, then the target period (Period To) is blanked out.
12. Enter the cost type code from which you are copying costing data in Cost Type

Source.
13. Enter the cost type code to which you are copying costing data in Cost Type Target.
When you try to copy costs to Actual Cost type, a warning displays. When you run
the Actual Cost process, all the copied costs are deleted.
14. Enter the Resource Class from which you are copying costing data. Setup resource
classes using the Resource Classes form. If you enter a resource class, only the costs
of resources that belong to the resource class will be copied. Leave the Resource
Class empty to copy all resource costs.
Copying Fixed Overheads

You can copy overhead details from:
One Period to:

• all subsequent open and frozen costing periods in the same calendar or
• all open and frozen periods if they are in different calendars
You can set up all of your overhead details between one period to other costing periods
and one cost type to other cost types and then copy those costs to all inventory
organizations in a legal entity rather then setting up the same data repeatedly.
Similarly, you may wish to do this from one costing period to all open and frozen
costing periods in the same or different calendars.
To copy overhead details:

1. Navigate to the Copy Overheads window.
Source and Target Parameters

2. Enter the inventory organization from which you are copying overhead details in
the Organization Source field.
3. Enter the inventory organization to which you are copying overhead details in the
Organization Target field.
To copy overhead details to all inventory organizations, leave this field blank.
4. Click All Organizations to copy overhead details to all inventory organizations in
Copying Costs 7-7

the given legal entity. If it is checked, then the target inventory organization
(inventory organization To) is cleared.
5. Enter a valid Legal Entity. The specified legal entity or organization must belong to
the specified target calendar.
6. Enter the cost calendar from which you are copying overhead details in Calendar
Source.
7. Enter the cost calendar to which you are copying overhead details in Calendar
Target .
8. You can copy overhead details from one period to another or to all periods in the
same or different calendars in Period Source. Enter the cost calendar period from
which you are copying overhead details.
9. Enter the cost calendar period to which you are copying overhead details in Period
Target. To copy overhead details to all periods, leave this field blank.
10. Click All Periods to copy overhead details to all subsequent open or frozen periods
in a given calendar. If it is checked, then the target period (Period To) is cleared.
11. Enter the cost type code from which you are copying overhead details in Cost Type
From.
12. Enter the cost type code to which you are copying overhead details in Cost Type To.
When you try to copy overheads to Actual Cost type, a warning displays. When
you run the Actual Cost process, all the copied overheads are deleted.
Selection Range
13. To restrict the copy to a range of items, enter the opening end and the closing end of
the item number range in Item (From and To).
14. To restrict the copy to a range of item cost categories, enter the opening end and the
closing end of the cost category range in Cost Category (From and To).
Existing Overhead
The Existing Costs field contains following options:
15. Remove Before Copy: Select Remove Before Copy option to remove current
overhead details as a result of the copy process. The current overhead details are
copied based on the other criteria you have entered, but the original component
overhead details are deleted.
16. Replace During Copy: Select Replace During Copy option to merge the current and
copied overhead details during the copy process. The resulting overhead details is

different from the one that was replaced.
Copying Overhead Percentage

You can copy percentage overhead values from one calendar period to another. It
eliminates the need for defining overhead percentages manually for each calendar and
period.
You can define overhead percentages once for one calendar and period and then use the
copy overhead percentage window to copy that data over to another calendar, to one or
all periods.
You can leave the target period blank, in which case:
• If the target calendar code is same as the source calendar code, then the overhead
percentage is copied to all the subsequent periods of target calendar.
• If the target calendar code is different from the source calendar code, then the
overhead percentage is copied to all the periods of the target calendar.
You can limit the number of records to be copied to target calendar and periods by
selecting the range of overhead codes.
To define overhead percentage:

1. Navigate to the Copy Percentage Overheads window.
2. Enter the legal entity from where you are copying the percentage overhead data in
Legal Entity From.
3. Enter the legal entity to where you are copying the percentage overhead data in
Legal Entity To.
4. Enter the cost Calendar From where you are copying the percentage overhead data.
Cost calendars are set up using the Cost Calendar window.
5. Enter the cost Calendar To where you are copying the percentage overhead data.
Cost calendars are set up using the Cost Calendar window.
6. Enter the cost calendar Period From which you are copying the percentage
overhead data. You can copy percentage overheads from one period to another or
to all periods in the same or different calendars.
Note: You can copy percentage overheads from a frozen or closed

period to an open one. However, you cannot copy overheads to a
frozen or closed period from an open one.
Copying Costs 7-9

Cost calendars periods are set up using the Cost Calendar window.
7. Enter the cost calendar Period To which you are copying the percentage overhead
data. To copy percentage overhead data to all periods, leave this field blank.
Note: You can copy percentage overheads from a frozen or closed

period to an open one. However, you cannot copy overheads to a
frozen or closed period from an open one.
Cost calendars periods are set up using the Cost Calendar window.
8. Click All Periods to copy percentage overhead data to all subsequent open or frozen
periods in a given calendar. If it is checked, then the target period (Period To) is
blanked out.
9. Enter Standard as the Cost Type code to be used. Only the Standard Cost type is
supported. Required.
Selection Range
10. Enter or select a Overhead Code for which percentage will be specified. Required.
Existing Percentage
11. The Existing Costs field contains following options:
• Remove Before Copy: Select Remove Before Copy option to remove existing
percentage overheads in target periods before the copy process. The current
overhead is copied based on the other criteria you entered, but the original
percentage overhead is deleted.
• Replace During Copy: Select Replace During Copy option to overwrite current
percentage overhead cost during the copy process. The resulting percentage
overheads are different from the one that was replaced. While doing so, if
system finds matching record at target calendar, period then the record is
updated with the source information else new record is inserted.
Copy Source Organizations

Set up the rollup source organization and then copy the set up data to other
organization , calendar, period, and item.
To copy rollup source organizations:

1. Navigate to the Copy Rollup Source Organizations window.
2. Enter the Organization to copy to.

3. Enter the Calendar to copy to.
4. Enter the Period to copy to.
5. Enter the Item Category to copy to.
6. Enter the item to copy to in Item.
Copying Costs 7-11

8
Period-End Cost Processing
This topic explain how to update (book) item component costs in preparation for export
to the proper general ledger accounts. The actual export to the general ledger requires
an interface with Oracle General Ledger. This topic provides an outline for period-end
processing of standard component costs and actual component costs.
• Running Cost Update
• Viewing Cost Update Results
• Viewing Cost Update Errors
• Aborting or Resetting the Cost Update Process
• Adding or Modifying Expense Allocation Costing Data
• Standard Cost Period-End Processing
• Actual Cost Period-End Processing
• Lot Cost Period-End Processing
Running Cost Update

OPM Costing provides you an ability to cost items using the various supported cost
types and view the costs simultaneously. Of these, you would use costs calculated by
one cost type, defined in the Fiscal Policy, to create journal entries and other activities
such as book variances. The Cost Update process creates the necessary cost records for
this purpose.
You have the option of freezing updated costs for the costing period or running the
update without any changes to the period status (you can run the update for the same
period again). This is useful for update of component costs to the General Ledger for
testing purposes. You can change component costs, then later run another cost update
to replace previous costs.
You can then export these booked cost values to the proper General Ledger accounts.
Period-End Cost Processing 8-1

Freezing Recipe, Formulas, Routings, Operations in Final Cost Update
The Cost Update process freezes recipes, formulas, routings, and operations. When a
period status is frozen, a concurrent process runs and freezes the associated recipes,
formulas, routings, operations, and recipe validity rules. If the concurrent process fails
to run, then only run the GMD Costing Status Update concurrent process to manually
freeze the formulas, recipes, routings, and operations.
To run the cost update process:

1. Navigate to the Cost Update window. The Start Cost Update Process window
displays automatically. This window lets you begin the update for a specified
calendar, period, and cost method. Specify the criteria by which OPM will select the
costs to be processed.
2. Enter the Legal Entity. Transactions for all organizations linked to this legal entity
are selected and included in the cost update process.
3. Enter the code for the Calendar for which the cost update is processed. Costs are
updated for the legal entity and the cost type linked to this calendar. Required.
4. Enter the cost Period for which the cost update is effective. Note that closed cost
periods are locked from the Cost Update process. Required
5. Period Status displays the status of the calendar period (either Open, Closed, or
Frozen). You cannot edit this field.
6. Enter the Cost Type. This should be the same cost type specified on the Fiscal Policy
window.
7. If you enter that the update is Final, then the period is marked as frozen at the end
of the process. This locks the component costs for the specified period.
When the costing period is frozen, the following situations apply:
• You cannot update the same period costs again (however, you can update new
item costs)
• You can only inquire on cost component details for the current period
(however, you can enter new cost details)
• Only the costs of new items may be calculated and updated.
• You can copy costs From a frozen costing period, but not To a period that is
frozen.
• Overhead details may be queried only.
• Resource cost details may be queried only.

8. Enter the date and time that the Cost Update process will start in Start Date. To start
the process immediately, click Now. To start the process at a particular date, click
Specific Date. Enter the date you want the cost update to run.
9. Click Accept to run the process.

A reference number is generated by OPM. Note the reference number.
10. Cost Update Reference Number displays a unique identifier number for each
individual cost update process assigned by OPM. You cannot edit the entry.
Viewing Cost Update Results

This window displays the result of the Cost Update process run.
To view the cost update process results:

1. Navigate to the Cost Update process window.
2. OPM assigns an identifier number for each individual cost process in Cost Update
Reference Number. You cannot edit the entry.
Selection Criteria
3. Displays the Legal Entity.
4. Displays the Calendar. Costs are updated for the legal entity and the cost type
linked to this calendar.
5. Displays the Period for which costs are updated. This period defines the start and
end dates for selecting all transactions.
7. Displays the Cost Type for which cost are updated.
Scheduling Information
8. Scheduled On displays when the Cost Update process was scheduled to run.
9. Started On displays the start date of the Cost Update process.
10. Started By displays the user ID and name of the person who started the Cost
Update process.
11. Ended On displays the end date for the Cost Update process.

Errors
12. Limit displays the error limit.
13. Found displays the number of errors found during the Cost Update process run.
14. Posted displays the number of errors posted.
Abort Information
15. Aborted By displays the name of the user who aborted the Cost Update process.
16. Aborted On displays the date on which the process was aborted.
17. Aborted Reason displays the reason for aborting the Cost Update process.
Cost Update Window - Additional Menu Features- Actions Menu

• View Error Messages - Use this option to list any errors generated during a cost
update processing run. Each generated error is listed on an individual,
OPM-generated line. The error itself is explained under the Error Comment
heading.
Note that the first message line is not an error, but a summary of the parameters
or options selected to start this update.
• Start - Displays the Start Cost Update dialog box, which allows you to begin the
update for a specified calendar, period, and cost method.
• Process Status - Use this option to review the status of a cost update that is in
progress. You can also review figures from previous processes, each of which is
identified by the CU Ref No. The CU Ref No lookup is available to help you in
selecting previous updates for query.
• Abort/Reset - Use this option to abort the cost update process that is running
currently. For situations where a process was terminated unintentionally (such
as a power failure), this option also resets the internal controls and settings
required to start the update process again.
An Aborted Reason field is provided to capture appropriate text.
Viewing Cost Update Errors

Cost Update Error Messages Window
The fields on this window are:
1. Cost Update Reference Number displays a unique identifier number for each
individual cost update process assigned by OPM. You cannot edit this field.

2. Line displays the line number of the error message.
Aborting or Resetting the Cost Update Process

This window lets you abort or reset the Cost Update process.
Aborted Reason displays the reason for aborting the subsidiary ledger update process.
To abort or reset the Cost Update process:

1. Navigate to the Cost Update Process window.
2. Select Abort/Reset from the Actions menu.
3. Enter the abort details and the reason for aborting the process.
Adding or Modifying Expense Allocation Costing Data

You can modify any accrued expense costs allocated from the General Ledger. You can
add new expense cost allocations to the ones that already exist, and create balances for
statistical accounts.
To add or modify GL cost data:

1. Navigate to Cost Allocation Maintenance. The Cost Allocation Maintenance
window displays.
2. Enter the Legal Entity for which you are making modifications. Required.
3. Indicate the costing Calendar for which you are making modifications. Required.
When a calendar is entered, the calendar's legal entity is validated against the given
legal entity. A warning displays if they do not match.
4. Enter the cost calendar Period. Required
5. Enter the Allocation Code that defines the accrued indirect general ledger expenses
that you are modifying. Required.
6. Enter the expense Account Key Type for which you are modifying general ledger
cost allocations. Required.
• Allocations
• Expense

7. At this point all of the accounts that meet the criteria you have specified display in
the bottom portion of the window. Modify the Amount for each account to reflect
the desired General Ledger cost allocation.
Standard Cost Period-End Processing

This topic provides an outline for period-end processing of standard costs. For detailed
procedures on each of the steps, refer to the following discussions.
The following graphic illustrates the Standard Cost Period-End Processing flow.
• First, establish raw material, resource, and overheads, and run the Cost Rollup
process. Review and verify costs.
• If the costs are correct, then complete all inventory transactions for the period and
run the preliminary inventory close and preliminary cost update process, and OPM
Accounting preprocessor and review the results.
• If the costs are correct and there are no reconciliation issues, then run the inventory
close and cost update process in the final mode. Also, run the OPM Accounting
preprocessor and Create Accounting process in the final mode to create accounting
entries in OPM Subledger.
• Finally, run the Create Accounting process again to export the Subledger Journals
to Oracle General Ledger.

Standard Cost Period-End Processing Flow
Run Cost Rollup

Run the cost rollup at period-end time to consolidate standard costs of raw materials
into product costs. The rollup encompasses component costs that have changed, and
also new items, formulas, products, routings, and overheads that were added and set
up for costing. Refer to the Using Standard Costs discussion for detailed cost rollup
procedures.
Run Preliminary Update

On the Cost Update window, indicate that you are Freezing the results of the cost rollup
for the period. You can then (optionally) run the Oracle Subledger Accounting and

Create Accounting process in the draft mode for testing purposes (you may later change
the raw material costs, then run another cost update to replace those costs).
Close Inventory Calendar Period

Close the period (month, quarter, fiscal year) to prevent any further inventory
transactions from being posted to it. Select either the Preliminary Close or Final Close.
• Preliminary Close - Period has been closed to transactions, but you may still open it
and post transactions for the period
• Final Close - Transactions will no longer post for the period (balances have been
frozen; you cannot open the period again)
Run Final Cost Update

Final Update
Specify that the update is Final; this locks the raw material costs for the specified
period. You can then export these costs to the proper General Ledger accounts.
Actual Cost Period-End Processing

The Actual Cost Period-End Processing topic provides an outline for period-end
processing of actual component costs.
The following graphic illustrates the Actual Cost Period-End Processing flow.
• Ensure all transactions (in Production, Inventory, Sales, and Shipping) are
completed and then run the Inventory close process either in the Preliminary or
Final mode.
• Create necessary actual cost adjustments, expense allocations, and cost overhead
data and run the Actual Cost process.
• Run preliminary cost update and OPM Accounting preprocessor and review the
results.
preprocessor and Create Accounting process to create accounting entries in OPM
Subledger. Finally, run the Create Accounting process again to export the Subledger
Journals to Oracle General Ledger.

Actual Cost Period-End Processing Flow
Close Inventory Calendar Period

Close the period (month, quarter, fiscal year) to prevent any additional inventory
transactions from being posted to it. Select either the Preliminary Close or Final Close.
• Preliminary Close - Period has been closed to transactions, but you may still open it
and post transactions for the period
• Final Close - Transactions will no longer post for the period (balances have been
frozen; you cannot open the period again)
Calculate Actual Costs

Specify the period for which actual costs are processed. The Actual Cost process takes

the following into account:
• Raw Material Costs
• Production Batch Costs
• Overhead Costs
The period in the cost calendar must be either open or frozen (a closed period cannot be
entered). Refer to the Actual Cost Calculations discussion for procedures on calculating
actual costs.
Run Preliminary Update

On the Cost Update window, indicate that you are Freezing the results of the cost rollup
for the period. You can then run the Oracle Subledger Accounting and Create
Accounting process in the draft mode for testing purposes (you can later change the
raw material costs, then run another cost update to replace those costs).
Run Final Cost Update

Final Update
Specify that the update is Final. This locks the raw material costs for the specified
period. You can then export these costs to the proper General Ledger accounts.
Lot Cost Period-End Processing

This topic provides an outline for period-end processing of standard costs. For detailed
procedures on each of the steps, refer to the following discussions.
The following graphic illustrates the Actual Cost Period-End Processing flow.
• Ensure all transactions in Production, Inventory, Sales, and Shipping are completed.
Run the Inventory close process either in the Preliminary or Final mode.
• Create necessary actual cost adjustments, expense allocations, and cost overhead
data and run the Actual Cost process.
• Run preliminary cost update and OPM Accounting preprocessor and review the
results.

preprocessor and Create Accounting process to create accounting entries in OPM
Subledger. Finally, run the Create Accounting process again to export the Subledger
Journals to Oracle General Ledger.
Lot Cost Period-End Processing Flow
All the period end processing steps are similar to the Actual Cost process period end
processing. Refer to the following topics description in the "Actual Cost Period End
Processing":
• Close inventory calendar period
• Run preliminary cost update or freeze costs for General Ledger
• Run final cost update

• Running Create Accounting process again to create and export accounting entries in
OPM Subledger to Oracle General Ledger

9
Cost Management Reports
This topic describes the available costing reports. Reports are available through the
Application's Standard Report Submission window.
• Item Cost Detail Report
• Costed Indented Bill of Materials Report
• GL Expense Allocation Definition
• GL Expense Allocation Detail Report
• Cost Organization Association Report
• GL Item Cost Detail Report
• Inventory Valuation Report
• Batch Yield Variance Report
• Material Usage and Substitution Variance Report
• OPM Lot Cost Detail Report
• OPM Lot Cost History Report
• Running the Detailed Subledger Report
• Running the Accounting Unit Mapping Report
• Running the Account Mapping Report
Item Cost Detail Report

Use the Item Cost Detail Report to view the cost of an item in each of the inventory
organizations in which it is stored. The costs shown are based on the cost calendar,
period, and cost method selected. The report can be printed by inventory organization,
item and item class.
Cost Management Reports 9-1

To submit the Item Cost Detail report:
1. Navigate to the Submit Request window.
2. Enter the Legal Entity for which you want to run the report.
3. Enter the cost Calendar Code for which you want to item costs
4. Enter the cost calendar Period for which you want to item costs.
5. Enter the Cost Type for which you want to item costs.
6. To report item costs for a range of inventory organizations, enter the first inventory
organization of the range in From Organization.
7. To report item costs for a range of inventory organizations, enter the last inventory
organization of the range in To Organization.
8. To report item costs for a range of items, enter the first item of the range in From
Item.
9. To report item costs for a range of items, enter the last item of the range in To Item.
10. To report item costs for a range of cost categories, enter the first cost category in the
range in From Cost Category.
11. To report item costs for a range of cost categories, enter the last cost category in the
range in To Item Cost Category.
12. Enter the currency in which the report is generated in Report Currency.
13. Enter the exchange rate for the currency in Exchange Rate.
Costed Indented Bill of Materials Report

The Costed Indented Bill of Materials Report is a listing of all the products, co-products,
by-products, intermediates, and raw materials that are used in the production of a
specific product in terms of Standard Cost break-up. The report enables you to
drill-down on costs to ingredient levels for better sourcing decisions. You can request
this report from the Item Cost Details and the Standard Cost Roll up window. The
report does not provide information for Actual Costing or Lot Costing Cost Types.
To run the Costed Indented Bill of Materials report:

2. Enter Costed Indented Bill of Materials in the name field.

3. Enter the Legal Entity for which the report is to be generated. Required.
4. Enter the Cost Calendar to consider to generate the report. Required.
5. Enter the Period in the Cost calendar for which you want to generate the report.
Required.
6. Select the Cost Type. Options are Standard, Actual, and Lot Costing. Required.
7. Enter any of the following fields to narrow the scope of the report:
• From Organization and To Organization to generate the report for a range of
organizations.
• From Item and To Item to generate the report for a range of items.
• From Cost Class and To Cost Class to generate the report for a range of cost
classes.
8. Enter Maximum BOM Level as the maximum number of BOM levels to include in
the report. The default value is 10. You can update this field. Required.
9. Enter Number of Indentation Character as the number of indentation characters to

include in the report. The default value is 2. You can update this field. Required.
10. Select the Report Type to specify the detail level you want on the report. Options
are:
• All to display Summary, Cost component, and BOM Item level details
• BOM Summary Only to display summary data for Material, Resource, Fixed
Overhead, and Standard Cost Adjustment usage categories, for a product at
each level of BOM
• BOM Item Details to display Summary and BOM Item level details. The BOM
Item Details breakup displays for a combination of Item, Cost Component, and
Analysis Code.
• Cost Component Details to display Summary and Cost Component level

details. The Cost Component Details breakup displays for a combination of cost
component , analysis Code, and Item.
11. Indicate how the report is to be sorted in the Sort By field. Options are:
• Item
• Organization

12. Click OK, then Submit.

The Actual Cost Adjustments Report reflects actual cost adjustments made for a specific
cost calendar and period. You can print cost adjustment information for all items in all
inventory organizations, or restrict the report to one or more items in one or more
specific inventory organizations.
To submit the Actual Cost Adjustments report:

2. Enter Legal Entity for which you are adjusting the cost.
3. Enter the cost calendar for which you are printing actual cost adjustments in the
Calendar Code field.
4. Enter the cost Period Code within the cost calendar for which you are printing
actual cost adjustments.
5. Enter the Cost Type for the type of actual costing adjustments that will be included
in the report.
6. To report actual cost adjustments for a range of inventory organizations, enter the
first inventory organization of the range in From Organization.
7. To report actual cost adjustments for a range of inventory organizations, enter the
last inventory organization of the range in To Organization.
8. To report actual cost adjustments for a range of items, enter the first item of the
range in From Item.
9. To report actual cost adjustments for a range of items, enter the last item of the
range in To Item.
GL Expense Allocation Definition

Report The GL Expense Allocation Definition Report lists the definitions of the accrued
general ledger expenses to be allocated to specified items. You can list definitions for all
general ledger expense allocation codes, or restrict the report to only desired ones.
To submit the GL Expense Allocation Definition report:


2. Enter Legal Entity for which you are listing General Ledger cost allocation account
definitions.
3. To report on a range of allocation codes, enter the first allocation code in the range
in From Allocation code.
4. To report on a range of account codes, enter the last allocation code in the range in
To Allocation Code.
GL Expense Allocation Detail Report

The GL Expense Allocation Detail Report is a detailed list of all of the expense costs that
were allocated to item components from the indirect expense accruals. You can list
allocation detail for all expense allocation codes, or restrict the report to allocations for
only desired ones.
To submit a GL Expense Allocation Detail report:

2. Enter Legal Entity for which you are listing general ledger cost allocation details.
3. Enter Cost Calendar to which expenses will be allocated to the mapped accounts.
4. Enter cost calendar Period Code to which expenses will be allocated to the mapped
accounts. This must be an open period.
5. To report on a range of expense allocations, enter the first allocation code of the
range in From Allocation code .
6. To report on a range of expense allocations, enter the last allocation code of the
range in To Allocation Code.
Cost Organization Association Report

The Cost Organization Association Report lists the cost organizations associated with
the inventory organizations, or inventory organizations associated with cost
organizations.
To submit the Cost Organization Association report:

2. To report associations for a range of cost organizations, enter the first cost
organization of the range in the From Cost Organization field.

3. To report associations for a range of cost organizations, enter the last cost
organization of the range in the To Cost Organization field.
4. To report associations for a range of inventory organizations, enter the first

inventory organization of the range in the From Inventory Organization field.
5. To report associations for a range of inventory organizations, enter the last

inventory organization of the range in the To Inventory Organization field.
6. If you want to list cost organizations associated with each specific inventory
organization, choose cost organizations in the Sort By fields. To list inventory
organizations associated with a specific cost organization, select the inventory
organization option.
GL Item Cost Detail Report

The GL Item Cost Detail Report lists the cost updates generated by the cost update
process. Use this report to verify the updated cost and make corrections before
executing the subsidiary ledger process. You can restrict the report to one or more items
or inventory organizations, and select from four report types:
• GL Item Cost Detail
• GL Item Cost Summary
• Zero/Negative Item Cost Detail
• Zero/Negative Item Cost Summary
To submit the GL Item Cost Detail report:

2. Enter the Calendar Code for which the report is to be generated in the field.
3. Enter the Period for which this report is to be generated in the Period field. The
period defined can be for an open, frozen, or closed period.
4. The Cost Method defined by the calendar displays. However, the default can be
changed.
5. To report for a range, enter the first item class of the range in From Item Class.
6. To report for a range, enter the last item class of the range in To Item Class.
7. To report for a range of items, enter the first item of the range in From Item.

8. To report for a range of items, enter the last item of the range in To Item.
9. To report for a range, enter the first inventory organization of the range in From
Whse.
10. To report for a range, enter the last inventory organization of the range in To Whse.
11. Indicate the Report Type to be printed in the field. There are four options:
• GL Item Cost Detail
• GL Item Cost Summary
• Zero/Negative Item Cost Detail
• Zero/Negative Item Cost Summary
12. Indicate whether the report should be generated by either an item or inventory
organization in Sort By.
Inventory Valuation Report

The Inventory Valuation report provides a tool to evaluate the cost of items in inventory
by organization. This report lists the true value of inventory items for a specified period
of time, in specified organizations. The costs listed are the accounting costs for the item
in the organization, if available. Otherwise, the cost of the item for the legal entity is
used. The inventory valuation can be based on balances available at report printing
time, or the closing balance for the end of a specified calendar period.
The report is listed by item within organization. This includes item onhand balances for
both primary and secondary units of measure, unit cost and total cost (value). You can
print the report for one or more organization or items.
To submit the GL Item Cost Detail report:

1. Navigate to the Submit Requests window.
2. Enter the Legal Entity for which you are listing general ledger cost allocation
detailsd.
3. Enter the beginning organization for the report in From Organization.
4. Enter the ending organization for the report in To Organization.
5. Enter the beginning item for the report in From Item.
6. Enter the ending item for the report in To Item.

7. To show current inventory valuation balances (that is, inventory valuation at report
printing time), select Yes in Current Balance. Otherwise, select No and complete the
Fiscal Year and Period to show inventory valuation as of a particular calendar and
period closing date.
8. To show inventory valuation as of a particular fiscal calendar year enter the cost
calendar code in Fiscal Year.
9. To show inventory valuation as of a particular period closing date, enter the period
code for the cost calendar year in Period Number.
10. If the report is to be run for a currency other than the legal entity's base currency
enter it in Report Currency . The report uses the legal entity's base currency by
default.
11. If an alternate currency is entered above, then specify the exchange rate in
Exchange Rate. The report uses a default value of 1.0.
You must complete inventory month-end processing in order for this report to
reflect accurate month-end balances.
Batch Yield Variance Report

The Batch Yield Variance Report is available through OPM Process Execution. Please
refer to Oracle Process Manufacturing Process Execution User's Guide for details.
Material Usage and Substitution Variance Report

The Material Usage and Substitution Variance Report is available through OPM Process
Execution. Please refer to Oracle Process Manufacturing Process Execution User's Guide for
details.
OPM Lot Cost Detail Report

The OPM Lot Cost Detail Report lists costs generated by the lot cost process. You can
verify the calculated costs.
Prerequisites
To submit the OPM Lot Cost Details report:

1. Navigate to the OPM Lot Cost Detail Report window.
2. Enter the Legal Entity for which the report is to be generated.

3. Select the appropriate Cost Type.
4. To report for a range of inventory organizations, enter the first inventory

organization in the range in From Organization.
5. To report for a range of inventory organizations, enter the last inventory

organization in the range in To Organization.
6. To report for a range of items, enter the first item in the range in From Item.
7. To report for a range of items, enter the last item in the range in To Item.
8. To report for a range of lots, enter the first lot in the range in From Lot.
9. To report for a range of lots, enter the last lot in the range in To Lot.
10. To report for a range of item cost category, enter the first item category in the range
in From Item Cost Category.
11. To report for a range of item cost category, enter the last item category in the range
in To Item Cost Category.
12. If the report is to be run for a currency other than the legal entity's base currency
enter it in Currency. The report uses the legal entity's base currency by default.
13. If an alternate currency is entered above, then specify the exchange rate in
Exchange Rate. The report uses a default value of 1.0.
14. Click Ok.
OPM Lot Cost History Report

The OPM Lot Cost History Report displays the lot history to analyze how the costs are
calculated. A history of item and lot is maintained for costing purposes. This history
detail includes all the receipts of a lot into inventory, all consumptions of the lot, and
adjustments.
Prerequisites
To submit the OPM Lot Cost History report:

1. Navigate to the OPM Lot Cost History Report window.
2. Enter the Legal Entity for which the report is to be generated.

3. Select the appropriate Cost Type.
4. To report for a range of inventory organizations, enter the first inventory

organization in the range in From Organization.
5. To report for a range of inventory organizations, enter the last inventory

organization in the range in To Organization .
6. To report for a range of items, enter the first item in the range in From Item.
7. To report for a range of items, enter the last item in the range in To Item.
8. To report for a range of lots, enter the first lot in the range in From Lot.
9. To report for a range of lots, enter the last lot in the range in To Lot.
10. To report for a range of item cost category, enter the first item category in the range
in From Item Cost Category.
11. To report for a range of item cost category, enter the last item category in the range
in To Item Cost Category.
12. To report for a range of dates, enter the first date in the range in From Date.
13. To report for a range of dates, enter the last date in the range in To Date.
14. If the report is run for a currency other than the legal entity's base currency, then
enter it in Currency. The report uses the legal entity's base currency by default.
15. If an alternate currency is entered above, then enter the exchange rate in Exchange
Rate.
16. Click Ok.
Running the Detailed Subledger Report

The Detailed Subledger report is run to print accounting transactions and event classes
for an organization as specified in the parameters. You must run the OPM Accounting
Pre-Processor for an organization and use the reference number generated to run the
Detailed Subledger report.
Prerequisites
❒ Run the OPM Accounting Pre-Processor.

To submit the Detailed Subledger report:
2. Enter Detailed Subledger Report in the Name field.
3. Enter any of the following fields to narrow the scope of the report:
• Reference No. that is generated after running the OPM Accounting
Pre-Processor.
Note: If you enter the Reference No, then the Ledger, Cost
Type, Fiscal Year, Period, Start Date, and End Date values
default from the associated run of the OPM Accounting
Pre-Processor.
• Legal Entity for which the report is to be generated.
• Ledger for which the report is to be generated.
• Cost Type for which the report is to be generated.
• Fiscal Year for which the report is to be generated.
• Period for which the report is to be generated.
• Organization Code of the organization for which the report is to be generated.
4. Enter the Start Date and the End Date to run the report for a specific range of dates.
5. Optionally, enter the Entity Code for which you want to run the report. This is an
optional field. Valid values are:
• Inventory Transactions
• Order Management
• Process Execution
• Purchasing Transactions
• Inventory Revaluation
For example, if you select Process Execution, then the report shows accounting
entries for transactions in OPM Process Execution only.
6. Optionally, enter the Event Class for which you want to run the report. This is an

optional field. The list of values displays only those event classes that belong to the
entity code you specify. For example, if you select Process Execution as the entity
code then the following event classes display in the list of values:
• Batch Close Variance
• Batch Material Transactions
• Batch Resource Transactions
7. Optionally, enter the Event Type for which you want to run the report. The list of
values displays only those event types that belong to the event class you specify.
8. Select Include Zero Amt. Lines as Yes if you want the report to include transactions
with zero values also.
9. Click OK.
10. Click Submit.
Running the Accounting Unit Mapping Report

The Accounting Unit Mapping Report prints a list of the accounting unit mappings you
have defined for a particular company. You can print the report for all or a range of
accounting units, organizations, or warehouses.
To run the Accounting Unit Mapping report:

2. Enter Accounting Unit Mapping in the Name field. The Parameters window
appears.
3. Enter the Company for which you want to print the report. This field defaults to the
company associated with your operator code but may be changed. Required.
4. Enter From Accounting Unit and To Accounting Unit to print the report for a range
of accounting units. If you want to run the report for all accounting units, then leave
the fields blank.
5. Enter From Orgn and To Orgn to run the report for a range of organizations. If you
want to run the report for all organizations, then leave the fields blank.
6. Enter From Whse and To Whse to run the report for a range of warehouses. If you
want to run the report for all warehouses, then leave the fields blank.
7. Click OK.

8. Click Submit.
Note: You can use the Accounting Unit Mapping and Account
Mapping reports to review the comparison of account mappings in
11i with new mappings in R12, only if you have migrated from
Release 11i to R12. If you are in Release 12, then you can use the
SLA Subledger Accounting Rules Detail Listing Report to view the
Application Accounting Definitions (AAD), Journal Line
Definitions (JLD), and Journal Line Type (JLT) definitions.
Running the Account Mapping Report

The Account Mapping Report prints a list of the account mappings you have defined
for a particular company. You can include all or a range of accounts and account titles.
To run the Account Mapping report:

1. Navigate to the Submit Request window
2. Enter Account Mapping in the Name field. The Parameters window appears.
3. Enter the Company for which you want to print the report. This field defaults to the
company associated with your operator code but may be changed. Required.
4. Enter From Account Title and To Account Title to print the report for a range of
account titles. If you want to run the report for all account titles, then leave the
fields blank.
5. Enter From Account No and To Account No to print the report for a range of
accounts. If you want to run the report for all accounts, then leave the fields blank.
6. Click OK.
7. Click Submit.

10
Accounting Setup
The following chapter describes the accounting setup done in Oracle Subledger
Architecture.
• Subledger Accounting
• Application Accounting Definition Hierarchy
• Multiple Subledger Accounting Valuation for a Transaction
• OPM Costing - SLA Accounting Data
Subledger Accounting
Accounting for all transactions uses Oracle Subledger Accounting (SLA). SLA delivers
many benefits, and lets you customize the way accounting is performed for a specific
event. You can use accounts derived from custom business logic based on data
provided by the application (accounting sources).
SLA is a common rule-based accounting engine used by Oracle products that posts
accounting entries into Oracle General Ledger. Rules are user-defined and reside in a
common repository for all subledger applications such as OPM Cost Management. The
SLA accounting engine is a common engine for all subledger applications and provides
you with a single common paradigm for defining your accounting behaviors.
The engine supports multiple currencies, as well as audit tools such as the XML
Publisher based Journal Entries report. This report also displays the balance of an
Inventory Valuation account within the specified date range. Refer to Journal Entries
Report, Oracle Subledger Accounting Implementation Guide.
The subledger accounting engine lets the accounting department maintain sophisticated
control over accounting and charts of accounts. Accounting rules can be defined against
most attributes. For example, you can use an attribute of an item to redirect accounting
to the proper category of Cost of Goods Sold within the Chart of Accounts. You can also
control and avoid user errors from being entered into the application. Incorrect entries
Accounting Setup 10-1

can be redirected to proper accounts.
Refer to the Oracle Subledger Accounting Implementation Guide for details on setting up
and using Subledger Accounting.
Application Accounting Definition Hierarchy

Accounting Methods Builder is a set of programs and utilities with SLA that lets you
create the event model. Account Derivation Rule builder is part of the Account Methods
Builder that lets you create a rule-based account construction. Transaction Account
Builder provides a subset of Accounting Methods Builder features. Journal Line Types
are defined in Accounting Methods Builder and include options to convert transaction
data into Subledger journal entry. Journal Line Types help to determine whether a
Subledger journal entry line is a debit or credit, whether it should be transferred to the
GL in summary or detail mode, whether matching lines must be merged and its balance
type (actual, encumbrance, or budget). Journal Line Types are defined for an event class
and are assigned to Event Class and Event Types. The Journal Line Types to use for an
event is defined using Source's. Journal Line Definition associate Journal Line Types
and Account Definition Rules. This determines what Account Derivation Rules to use
for Journal Line Types.
For example, for Production Batches, OPM maps INV, RCA, RUV, WIP Journal Line
Types and assigns them to the appropriate event class and event type. You must create
an Account Derivation Rule to use the AAP account during goods receipt. GL Accounts
are retrieved using Account Derivation Rules.
Accounting template is setup using Application Accounting Definition. Application
Accounting Definition determines how the accounting for events are processed by
accounting program. You can setup accounting templates in addition to what is
provided as seed data.
Application Accounting Definition ties all the these together. Events, Journal Line
Types, Account Definition Rules, and Analytical Criteria collectively define Application
Accounting Definition. Account Definition Rules and Analytical Criteria are assigned to
Journal Line Types, which are then assigned to Events and these Events are assigned to
Application Accounting Definition. You can create multiple Application Accounting
Definition for each transaction model. All the Application Accounting Definitions are
grouped to form Subledger Accounting Method. To complete the setup, the Subledger
Accounting Method is assigned to a Ledger. Refer the Oracle Subledger Accounting
Implementation Guide for more details. For example, in the case of Application
Accounting Definition for Production Batch contains Event Classes (Release,
Completion, and Closure), Journal Line Types (INV, WIP, RCA, RUV), Account
Definition Rules (user-defined), and journal line descriptions.
Multiple Subledger Accounting Valuation for a Transaction

You can use the Valuation Cost Method option on the Subledger Applications window

to generate accounting for transactions using multiple cost methods for simulations.
SLA supports different accounting for each valuation method. At anytime there can be
more than one representation. You must setup secondary ledgers and assign a valuation
method to it. Refer to "Assigning Ledgers" topic for more details.
To create multiple accounting representations:
• Create secondary ledgers and other required setup.
• Select Subject to Valuation Method option in the Subledger Applications window of

Oracle Subledger Accounting application available from the OPM Financials
responsibility.
• Set up Fiscal Policy for the operating unit in OPM Financials.
• Select Valuation Method Assignment window from the Fiscal Policy window
Actions menu to assign valuation methods ledgers.
• Assign Valuation Method to each ledger to see the accounting representations.
OPM Costing - SLA Accounting Data
Events
Oracle Subledger Architecture Event model consists of Event Entity, Event Class, and
Event Type. Events are seeded into SLA to process OPM transactions. SLA calls the
extract program during accounting to extract amounts for these transactions that are
posted to GL Accounts.
The following table displays the OPM entities:
Entity Type Entity Name
INVENTORY Inventory Transaction
ORDER MANAGEMENT Order Management
PRODUCTION Process Execution
PURCHASING Purchasing Transactions
REVALUATION Inventory Revaluation
The following table displays the OPM entities, event classes, and event type names:

Entity Name Event Class Name Entity Type Code Event Type Name
Inventory Actual Cost ACTCOSTADJ Actual Cost

Revaluation Adjustment Adjustment
Inventory Cost Revaluation COSTREVAL Cost Revaluation

Revaluation
Inventory Lot Cost Adjustment LOTCOSTADJ Lot Cost Adjustment

Revaluation
Inventory Direct Interorg DIR_INTERORG_RC Direct Interorg

Transactions Receipt PT_TP Receipt, Transfer
Pricing
Inventory Direct Interorg DIR_INTERORG_RC Direct Interorg

Transactions Receipt PT Receipt, no Transfer
Pricing
Inventory Direct Interorg DIR_INTERORG_SHI Direct Interorg

Transactions Shipment P_TP Shipment, Transfer
Pricing
Inventory Direct Interorg DIR_INTERORG_SHI Direct Interorg

Transactions Shipment P Shipment, no
Transfer Pricing
Inventory Internal Order to INT_ORDER_ISSUE Internal Order Issue

Transactions Expense to Expense
Inventory Internal Order to EXP_REQ_RCPT Internal Order

Transactions Expense Receipt to Expense
Inventory Intransit Interorg FOB_SHIP_RECIPIE Intransit Interorg

Transactions Receipt for FOB NT_RCPT Receipt for FOB
Shipment Shipment
Inventory Intransit Interorg FOB_RCPT_SENDER Intransit Interorg

Transactions Shipment for FOB _SHIP Shipment for FOB
Receipt Receipt
Inventory Logical Intercompany LOG_IC_SHIPMENT Logical

Transactions _RCPT InterCompany
Receipt

Inventory Logical Intercompany LOG_IC_RCPT_RET Logical

Transactions URN InterCompany
Receipt Return
Inventory Logical Intercompany LOG_IC_SALES_RET Logical

Transactions URN InterCompany Sales
Return
Inventory Logical Intercompany LOG_IC_SALES_ISSU Logical Intercompany

Transactions E Sales Issue
Inventory Miscellaneous ACCT_ALIAS_ISSUE Account Alias Issue

Transactions Transactions
Inventory Miscellaneous ACCT_ALIAS_RECEI Account Alias

Transactions Transactions PT Receipt
Inventory Miscellaneous ACCT_ISSUE Account Issue

Inventory Miscellaneous ACCT_RECEIPT Account Receipt

Order Management RMA LOG_RMA_RECEIPT Logical RMA Receipt
Order Management RMA RMA_RECEIPT RMA Receipt
Order Management RMA RMA_RETURN RMA Return
Order Management Shipments COGS_RECOGNITIO COGS Recognition

N
Order Management Shipments COGS_RECOGNITIO COGS Recognition

N_ADJ Adjustment
Order Management Shipments LOG_SO_ISSUE Logical Sales Order

Issue
Order Management Shipments SO_ISSUE Sales Order Issue
Process Execution Batch Close Variances CLOS Batch Close

Process Execution Batch Material CERT Batch Completion

Transactions
Process Execution Batch Material RELE Batch Release

Transactions
Process Execution Batch Resource STEP Step Completion

Transactions
Purchasing Deliver to or Return INT_REQ_RECEIPT_ Internal Requisition

Transactions from Inventory ADJ Receipt Adjustment
Purchasing Deliver to or Return LOG_PO_RECEIPT Logical PO Receipt

Transactions from Inventory
Purchasing Deliver to or Return LOG_PO_RCV_ADJ Logical PO Receipt

Transactions from Inventory Logical Adjustment
Purchasing Deliver to or Return LOG_RET_TO_RECEI Logical Return to

Transactions from Inventory VING Receiving
Purchasing Deliver to or Return PO_RECEIPT PO PO Receipt

Purchasing Deliver to or Return PO_RECEIPT_ADJ PO Receipt

Transactions from Inventory Adjustment
Purchasing Deliver to or Return RETRO_PRICE_UPD Retroactive Price

Transactions from Inventory Update
Purchasing Deliver to or Return RET_TO_RECEIVING Return to Receiving

Transactions from Inventory from Inventory
Purchasing Deliver to or Return XFER_TO_CONSIGN Transfer to

Transactions from Inventory ED Consigned
Purchasing Deliver to or Return XFER_TO_REGULAR Transfer to Regular

Purchasing Receiving DELIVER_EXPENSE Deliver to Expense

Transactions

Purchasing Receiving EXP_RET_TO_RECEI Expense Return to

Transactions VING Receiving
Purchasing Receiving LOG_RECEIVE Logical Receiving

Transactions
Purchasing Receiving LOG_RET_TO_VEND Logical Return to

Transactions OR Vendor
Purchasing Receiving RECEIVE Receive to Inspection

Transactions
Purchasing Landed Cost LC_ADJUST_DELIVE Landed Cost

Transactions Adjustment R Adjustment- Deliver
Purchasing Landed Cost LC_ADJUST_EXP_DE Landed Cost

Transactions Adjustment LIVER Adjustment- Expense
Deliver
Purchasing Landed Cost LC_ADJUST_ Landed Cost

Transactions Adjustment RECEIVE Adjustment- Receive
Purchasing Landed Cost LC_ADJUST_VALUA Landed Cost

Transactions Adjustment TION Adjustment-
Valuation
Account Definitions
Account definitions are created in Accounting Methods Builder (AMB) determine the
journal line types, descriptions, General Ledger accounts and other elements of
subledger journal entries. Each of the components is explained.
Journal Line Types (JLTs) determine basic information about a subledger journal entry
line. This information includes whether the line is a debit or credit, whether it must be
transferred to the General Ledger in summary or detail mode, whether matching lines
should be merged, and its balance type (actual, encumbrance, or budget).
Journal Line Definition associate Journal Line Types and Account Derivation Rules.
This determines which account derivation rules to use for journal line types. GL
Accounts are retrieved using account derivation rules.

Note: The Journal Line Types are specific to Event Classes. In some
cases, the Journal Line Type could be repeated under more than one
event class.
The following table displays the OPM Costing - SLA Journal Line Types:
Journal Line Type Code Journal Line Type Journal Line Code
AAP Accrued Accounts Payable Accrued Accounts Payable
ALC Allocation Allocation
ALV Allocation Variance Allocation Variance
CLEARING Clearing Clearing
CLEARING Clearing Account Clearing
CLS Batch Close Variance Batch Close Variance
COGS Cost of Goods Sold Cost of Goods Sold
DCOGS Deferred Cost of Goods Sold Deferred Cost of Goods Sold
EXP Expense Expense
EXP_SUB_FROM Expense - Transfer From Inventory - Transfers
EXP_SUB_TO Expense - Transfer To Inventory - Transfers
FRT Freight Expense Freight Expense
ICACC Intercompany Accrual Intercompany Accrual
ICCOGS Intercompany COGS Intercompany Cost of Goods

Sold
ICEXP Intercompany Expense Intercompany Expense
INV Inventory Valuation Inventory Valuation
INV_SUB_FROM Inventory - Transfer From Inventory - Transfers

INV_SUB_TO Inventory - Transfer To Inventory - Transfers
IOP Inter-Org Payables Inter-Org Payables
IOPR Inter-Org Profit Inter-Org Profit
IOR Inter-Org Receivables Inter-Org Receivables
IRV Inventory Revaluation Inventory Revaluation

Variance Variance
ISP Receiving Inspection Receiving Inspection
ITR Intransit Inventory Intransit Valuation
IVA Inventory Adjustments Inventory Adjustments

Expense Expense
OHV Overhead Variance Overhead Variance
OVH Overhead Absorption Overhead Absorption
PIN Profit In Inventory Profit in Inventory
PPV Purchase Price Variance Purchase Price Variance
RCA Resource Control Account Resource Control Account
RMV Resource Manning Variance Resource Manning Variance
RPADJ Retroactive Price Adjustment Retroactive Price Adjustment
RSV Resource Substitution Resource

Variance Substitution/Method Variance
RUV Resource Usage Variance Resource Usage/Efficiency

Variance
SUB Substitution Variance Substitution Variance

USG Usage Variance Usage Variance
WIP Work in Process Valuation Work In Process Valuation
XTC Interorg Transfer Credit Inter-Org Transfer Credit
YLD Yield Variance Yield Variance
LCA Landed Cost Absorption Landed Cost Absorption
LCV Landed Cost Variance Landed Cost Variance
The following table displays the OPM Costing - SLA Account Derivation Rules:
Segment Rule Code Segment Rule Type
AAP Accrued Accounts Payable
ALC Allocation
ALV Allocation Variance
CLEARING Clearing Account
CLS Batch Close Variance
COGS Cost of Goods Sold
DCOGS Deferred Cost of Goods Sold
EXP Expense
FRT Freight Expense
ICACC Intercompany Accrual
ICCOGS Intercompany COGS
ICEXP Intercompany Expense

INV Inventory Valuation
INV_SUB_FROM Inventory - Transfer From
INV_SUB_TO Inventory - Transfer To
IOP Inter-Org Payables
IOPR Inter-Org Profit
IOR Inter-Org Receivables
IRV Inventory Revaluation Variance
ISP Receiving Inspection
ITR Intransit Inventory
IVA Inventory Adjustments Expense
OHV Overhead Variance
OVH Overhead Absorption
PIN Profit In Inventory
PPV Purchase Price Variance
RCA Resource Control Account
RMV Resource Manning Variance
RPADJ Retroactive Price Adjustment
RSV Resource Substitution Variance
RUV Resource Usage Variance
SUB Substitution Variance

USG Usage Variance
WIP Work in Process Valuation
XTC Interorg Transfer Credit
YLD Yield Variance
The following table displays the OPM Costing - SLA Journal Line Definitions:
Journal Line Definition Code Journal Line Definition Name
ACTCOSTADJ Actual Cost Adjustments
BATCH_CLOSE Batch Close
BATCH_COMPLETION Batch Completion
BATCH_RELEASE Batch Release
BATCH_STEP Step Completion
COSTREVAL Cost Revaluation
INT_REQ_RCPT_ADJ Internal Requisition Receipt Adjustment
LOG_PO_RCV_ADJ Logical PO Receipt Adjustment
LOGICAL_PO_RECEIPT Logical PO Receipt
LOG_RET_TO_RECEIVING Logical Return to Receiving
DELIVER PO Receipt
PO_RECEIPT_ADJ PO Receipt Adjustment
RETRO_PRICE_UPD Retroactive Price Update
PO_RETURN Return to Receiving

XFER_TO_CONSIGN Transfer to Consigned
XFER_TO_REG Transfer to Regular
DIRECT_XFER_RECV Direct Inter-Org Receipt, no Transfer Pricing
DIRECT_XFER_RECV_TP Direct Interorg Receipt, Transfer Pricing
DIRECT_XFER_SHIP Direct Interorg Shipment, no Transfer Pricing
DIRECT_XFER_SHIP_TP Direct Interorg Shipment, Transfer Pricing
FOB_RCPT_RECIPIENT_RCPT_NO_TP Recipient-side Intransit Interorg Receipt for

FOB Receipt, no Transfer Pricing
FOB_RCPT_RECIPIENT_RCPT_TP Recipient-side Intransit Interorg Receipt for

FOB Receipt, Transfer Pricing
FOB_RCPT_SENDER_RCPT_NO_TP Sender-side Intransit Interorg Receipt for FOB

Receipt, no transfer Pricing
FOB_RCPT_SENDER_RCPT_TP Sender-side Intransit Interorg Receipt for FOB

Receipt, Transfer Pricing
FOB_RCPT_SENDER_SHIP Intransit Interorg Shipment for FOB Receipt
FOB_SHIP_RECIPIENT_RCPT Intransit Interorg Receipt for FOB Shipment
FOB_SHIP_RECIPIENT_SHIP_NO_TP Recipient-side Intransit Interorg Shipment for

FOB Shipment, no Transfer Pricing
FOB_SHIP_RECIPIENT_SHIP_TP Recipient-side Intransit Interorg Shipment for

FOB Shipment, Transfer Pricing
FOB_SHIP_SENDER_SHIP_NO_TP Sender-side Intransit Interorg Shipment for

FOB Shipment, no Transfer Pricing
FOB_SHIP_SENDER_SHIP_TP Sender-side Intransit Interorg Shipment for

FOB Shipment, Transfer Pricing
EXP_REQ_RCPT Internal Order Receipt to Expense

EXP_REQ_RCPT_TP Internal Order Receipt into Expense, Transfer

Pricing
INT_ORDER_ISSUE Internal Order Issue to Expense
INT_ORDER_ISSUE_TP Internal Order to Expense, Transfer Pricing
LOG_IC_RCPT_RETURN Logical InterCompany Receipt Return
LOG_IC_SALES_ISSUE Logical Intercompany Sales Issue
LOG_IC_SALES_RETURN Logical InterCompany Sales Return
LOG_IC_SHIPMENT_RCPT Logical InterCompany Receipt
LOTCOSTADJ Lot Cost Adjustments
MISC_TXN Miscellaneous Transactions
ADJUST_DELIVER Adjust Deliver
ADJUST_RECEIVE Adjust Receive
DELIVER_EXPENSE Deliver to Expense
EXP_RET_TO_RECEIVING Expense Return to Receiving
LOG_RECEIVE Logical Receiving
LOG_RET_TO_VENDOR Logical Return to Vendor
RECEIVE Receive to Inspection
RETURN Return to Vendor
RMA RMA Receipt or Return
COGS_RECOGNITION COGS Recognition
COGS_RECOGNITION_ADJ COGS Recognition Adjustment

LOGICAL_SO_ISSUE Logical Sales Order Issue
SO_ISSUE Sales Order Issue
SUBINV_XFER Sub-inventory Transfers

11
Accounting Processes and Distributions
This chapter describes the subledger account distribution.

• Running the OPM Accounting Preprocessor
• Viewing the Accounting Preprocessor Results
• SLA Accounting Processes
• Viewing Accounting Events Journal Entries
• Subledger Account Distribution
• Business Rules for Distributions
• Oracle Inventory Distributions
• OPM Costing Distribution
• Production Distribution
• Oracle Order Management Distribution for Process Organization
• Oracle Purchasing Distribution for Process Organization
• Enhanced Drop Shipments and Global Procurement
Running the OPM Accounting Preprocessor

OPM Financials includes OPM Accounting Preprocessor that lets you create events in
SLA tables. SLA identifies eligible events and uses these events to extract data using
OPM supplied extract program into extract tables.
To view the accounting preprocessor entries:

1. Navigate to the OPM Accounting Preprocessor window.
2. Select Submit Process from the Actions menu.
Accounting Processes and Distributions 11-1

3. Enter the Legal Entity for which you are running the process.
4. Select the Ledger associated to the Legal Entity and to which you are posting the
journal entries to.
5. Cost Type associated to the selected legal entity displays.
6. Select the Fiscal Year for which the processor is run.
7. Select the Period of the fiscal year for which the processor is run.
8. Enter the date in the Open Period.
9. OPM retrieves the corresponding Open GL Fiscal Year for the specified date.
10. OPM retrieves the corresponding GL Period for the specified date.
11. Enter the first day of the period of the fiscal year for which the test subsidiary
ledger update is being performed in Post Start Date .
12. Enter the last day of the period of the fiscal year for which the test subsidiary ledger
update is being performed in Post End Date.
13. Indicate if transaction must be posted when there is no cost.
14. Select the sources to run the process for:
• Order Management Transactions
• Product Batch Transactions
• Costing Transactions
When you select Costing Transaction, the Cost Revaluation Parameters tab is
enabled.
Select Revaluation Transactions and or Actual Cost Adjustments.
15. Enter the date and time that the preprocessor must start in Start Date.
16. Click Now to start the process immediately.
17. To start the process at a particular date, click the Specific Date radio button.
18. Enter the date you want the preprocessor to run.

19. Click Ok to run the process.
The reference number displays, make a note of it.
Viewing the Accounting Preprocessor Results

The OPM Accounting Preprocessor window displays the results of the preprocessor
run. You can query the result by reference number.
To view the accounting preprocessor results:

1. Navigate to the OPM Accounting Preprocessor window.
2. Select View Process from the Actions menu.
3. Indicates the reference number assigned for the accounting preprocessor run.
4. Displays the number of Extract Headers Created.
5. Displays the number of Extract Lines Created.
6. Indicates the number of rows posted to the GL table.
Schedule Status
7. Displays the start date and time of the accounting preprocessor in Started On.
8. Displays the end date and time of the accounting preprocessor in Ended On.
9. Displays whether the accounting preprocessor is scheduled for now or a specific

date in Scheduled On.
10. Displays the name of the user who started the accounting preprocessor in Started
By.
Abort Information
1. Displays the name of the user who aborted the accounting preprocessor in By.
2. Displays the reason for aborting the accounting preprocessor in Reason.
Criteria
11. Displays the Legal Entity for which you are running the process.
12. Displays the Ledger associated to the Legal Entity and to which you are posting the
journal entries to.
13. Displays the Cost Type associated to the selected legal entity.

14. Displays the Fiscal Year for which the processor is run.
15. Displays the period of the fiscal year for which the processor is run.
16. Displays the date in the Open Period.
17. OPM retrieves the corresponding Open GL Fiscal Year for the specified date.
18. OPM retrieves the corresponding GL Period for the specified date.
19. Displays the first day of the period of the fiscal year for which the test subsidiary
ledger update is being performed in Post Start Date.
20. Displays the last day of the period of the fiscal year for which the test subsidiary
ledger update is being performed in Post End Date.
21. Indicates whether transaction was posted when there was no cost.
22. Displays the sources selected to run the process for:
• Order Management Transactions
• Product Batch Transactions
• Costing Transactions
• Revaluation Transactions
Cost Revaluation Parameters

23. Enter the cost calendar you are revaluing inventory from in Prior Calendar.
24. Enter the cost period you are revaluing inventory from in Prior Period.
25. Enter the cost method you are revaluing inventory from in Prior Cost Type.
26. Enter the cost calendar you are revaluing to in Current Calendar.
27. Enter the cost period you are revaluing to in Current Period.
28. Enter the cost method you are revaluing to in Current Cost Type.
29. Enter the date you wish the cost revaluation process to post to when doing a

updating the subsidiary ledger in GL Transaction Date.
SLA Accounting Processes

In Oracle Applications Release 12, OPM Financials responsibility includes SLA
Accounting menu that lets you create all user-defined accounting data. The following
illustrates the OPM Cost Management - SLA process of generating and viewing
accounting entries.
Create Accounting
Create Accounting process is run to create accounting journal entries on the transaction
data. SLA Create Accounting request is available from the OPM Financials
Responsibility. For details, see: Create Accounting Program, Oracle Subledger
Accounting Implementation Guide.
Note: You must run the Transfer Journal Entries to GL program to

transfer accounting entries to GL if the option to transfer them to GL is
set to No in the Create Accounting program.
Transfer Journal Entries to GL

Transfer to GL is an option on the Create Accounting program. If you set this to Yes,
Accounting process transfers subledger journal entries to General Ledger. If you select
the option, Post in GL, the journal entries are posted to General Ledger.
See: Transfer Journal Entries to GL Program, Oracle Subledger Accounting
Implementation Guide.
Viewing Accounting Events and Journal Entries

You can view accounting events and journal entries associated with transactions using
the Subledger Accounting user interface, or view the accounting events and journal
entries from the various transaction inquiry windows. See: Viewing Accounting Events.
Viewing Accounting Events Journal Entries

You can view accounting events and journal entries associated with transactions using
the Subledger Accounting user interface (HTML). See: Accounting Events Inquiry,
Oracle Subledger Accounting Implementation Guide. You can access the Subledger
Accounting user interface by navigating to Accounting Events, Journal Entries, and
Journal Entry Lines from the OPM Financials responsibility.
You can also view accounting events and journal entries associated with transactions by
accessing the Subledger Accounting user interface from the View Transactions

windows. From the View Receiving Transactions, View Material Transactions, or View
Resource Transactions windows, choose tools from the menu bar, and then select View
Accounting Events. The following illustrates viewing the Subledger Accounting user
interface from the Material Transactions window. Other View Transactions windows
use similar steps.
To view accounting events and journal entries from the Material

Transactions window:
1. Navigate to the Material Transactions window. The Find Material Transactions
window appears
2. Enter material transaction search criteria and choose Find. The Material
Transactions window displays.
3. Select a transaction and choose Tools from the tool bar. Select View Accounting
Events and the Accounting Events User Interface displays. The View Accounting
Event and accounting is enabled only after account has been done either in draft or
final mode.
From View Events or Journal Entries, you can select an entry and navigate to the
transaction window using the View Transaction option.
Subledger Account Distribution

This topic describes the calculations used to build account distributions for process
organizations within Oracle Subledger Accounting (SLA).
The account distribution is not impacted by whether you use standard, actual, or lot
cost type to develop the item cost except in the case of production. The distribution
discussion for production provides specific business cases to illustrate the differences in
the journal entries under standard, actual, lot costing.
Tables shown in this topic describe which journal line types are used to create
distributions. Each table shows journal line type, credit and debit calculation.
In the case of reverse transactions the same journal line type templates are used; the
entries which display debits are reversed and become credits. Similarly, credits become
debits.
Usually, when reversing a transaction such as an unrelease of a production batch, the
quantities with positive value would now have negative value. The negative debits
(negative quantities multiplied by cost) become credits.
Business Rules for Distributions

SLA follows these rules when creating distributions.

Cost Organization Associations
OPM allows you to group individual inventory organizations into associations for
costing purposes. These associations reduce the number of cost detail records that the
system has to maintain. The accounting process uses these associations when it finds
the cost for an item.
The system uses the inventory organization stored on the inventory transaction to
determine the appropriate GL item cost per unit. If cost association inventory
organizations are used, then the system first looks for that item's cost in the cost
association inventory organizations. If the cost does not exist, then the accounting
process will not have a cost to use. If a cost for that item exists in the specific inventory
organization on the transaction record, it is ignored since that inventory organization is
not the cost association inventory organization.
GL Posting Date
Usually, the transaction date on the inventory record is considered as the GL posting
date. This is not true in the following cases: For inventory revaluation, also referred to
as cost revaluation, you can enter a GL posting date as the GL transaction date on the
Fiscal Policy window for inventory revaluation.
Currency
All inventory transactions are valued in both the base or functional currency of the
ledger as well as the transaction currency. The decimal precision for all amounts is
determined by the currency rules setup in the Oracle General Ledger.
Debit/Credit
Throughout the Subsidiary Ledger, when a negative amount is determined for a debit,
it is posted as a credit. The rule used is that a negative debit becomes a credit. Similarly,
a negative credit becomes a debit entry.
Cost Basis
On the OPM Fiscal Policy window, you can use an option to specify by legal entity
whether the current period or prior period's cost must be used for creating
distributions. By default this option creates distributions using the current period's cost.
However, if you are using Actual Costing you can choose to use the prior period's cost
for building journal entries. Since this option is set at the legal entity level, all of the
transactions in that legal entity use the same cost basis.

Oracle Inventory Distributions
Oracle Inventory contains several types of transactions and the journal entry templates
with journal line types used for each of these transactions.
Miscellaneous Receipts, Account Receipts, Account Alias Receipts

The following table provides the miscellaneous receipt distribution:
Account Title Debit Credit
INV [Transaction Qty x

Organization Total Item Cost]
IVA [Transaction Qty x

Miscellaneous Issues, Account Issues, Account Alias Issues

The following table provides the miscellaneous issue distribution:
Account Title Debit Credit
INV [Transaction Qty x

IVA [Transaction Qty x

Inventory Organization Transfers

Inventory transfer functionality lets you transfer material from one organization to
another (within the same legal entity or between process to discrete organizations).
In the case of inventory transfers, time taken for moving materials from a source
organization to a target organization can be several days.
Inventory transfer creates two transactions one for each organization involved. At the
time of shipment, the entries shown in the first table are created for the source
organization shipping the material. At the time of receipt, another transaction is created
for the target organization receiving the goods.
Transfers of material from one organization to another can be accomplished through

several different ways. The material is transferred directly using a direct transfer where
there is no intransit inventory. The transfer can be done as an intransit transfer where
the inventory goes through an intransit stage. Intransit inventory is owned by either the
sender (FOB Receiving) or the receiver (FOB Shipping) of the goods. The direct or
intransit transfer are done through an Internal Sales Order. The following table
summarizes the various options and features available within each type of transfer.
Direct Transfer Intransit Transfer
Material is transferred immediately and is Material goes into intransit and must be
decremented or incremented in the source or explicitly received in the destination
destination organization at the same time organization.
Transactions are created using Inventory The shipment is created using Inventory
Transfers and both from and to transactions Transfers and is received using the Receiving
are created at the same time. window.
No FOB options are applicable as transfer FOB option can be either Shipping or
happens immediately. Receiving.
Can also be done using Internal Orders. Can also be done using Internal Orders.
Intercompany Invoicing is not supported. Intercompany Invoicing is supported for

transfers across Operating Units that are done
using Internal Orders.
Freight and transfer credits can be used. Freight and transfer credits can be used.
However, freight is not applicable for Internal However, freight is not applicable for Internal
Order transfers. Order transfers.
Transfer Credit is applicable only in the case

where the transfer happens within the same
Operating Unit or if the invoicing is not used.
Transfer Price is required in case of

Intercompany Invoiced transfers.
In all of the interorganization transfers, the distribution templates shown include both
the journal created on the sending side as well as the receiving side. In case of intransit
transfers, the intransit entry is also shown along with the owner of the intransit.
Process to Process Transfers

Interorganization transfers from a process organization to another process organization
within the same operating unit use the source organization cost for the transfer. For
transfers that go across operating units, a Transfer Price is required and the applicable

transfer price is used as the cost of the transfer in the receiving organization.
Direct Transfers (within the same Operating Unit)

Distribution created in the Sending Organization based on the shipping transaction
Journal Line Type Debit Credit
IOR Transaction Qty x Sending

Org Cost + Freight + Transfer
Credit
INV Transaction Qty x Sending

Org Cost
FRT Freight
XFC Transfer Credit
Distribution created in the Receiving Organization based on the receipt transaction

In case of standard costing, Inventory account is debited using the receiving
organization cost and a PPV is generated irrespective of the option selected for
Purchase Price Variance in the Event Fiscal Policy window. In case of average costing,
when Purchase Price Variance option is set to Book INV at Receipt Price (i.e NO PPV)
Inventory account is debited using the receiving organization cost and a PPV is
generated:
INV Transaction Qty x Receiving

Organization Cost
IOP Transaction Qty x Sending

Organization Cost + Freight +
Transfer Credit
PPV [Transaction Qty x Sending

Organization Cost + Freight +
Transfer Credit] –
[Transaction Qty x Receiving
Organization Cost]
In the case of actual costing where the Event Fiscal Policy is set to use PO Price for

Inventory account, no PPV is generated and the distribution is created as below.

Organization Cost + Freight
+Transfer Credit
IOP Transaction Qty x Sending

Organization Cost + Freight
+Transfer Credit
Direct Transfers Across Operating Units

Distribution created in the Sending Organization based on the shipping transaction
The interorg profit account is used to capture the difference between the transfer price
and the item cost in the sending organization.
IOR Transaction Qty x Transfer

Price

Organization Cost
Freight Freight
IOPR [Transaction Qty x Transfer

Price] – [Transaction Qty x
Sending Organization Cost +
Freight]
Distribution created in the Receiving Organization based on the receipt transaction

In case of standard costing, Inventory account is debited using the receiving
organization cost and a PPV is generated.

INV Transaction Qty x Receiving

Organization Cost
IOP Transaction Qty x Transfer

Price (converted to receiving
Legal Entity's currency)
PPV [Transaction Qty x Transfer

Legal Entity's currency)] –
[Transaction Qty x Receiving
Organization Cost]
In the case of actual costing where the Event Fiscal Policy is set to use PO Price for
Inventory account, PPV is generated and the distribution is created as below.
INV Transaction Qty x Transfer

IOP Transaction Qty x Transfer

PPV Transaction Qty x (Transfer

Price- Item Cost of Receiving
Organization)
Inventory Transfers Between Process to Discrete Organizations

You can transfer inventory between Discrete and Process Organizations.
Transfers between Discrete and Process Organizations use a transfer price that is set up
between the organizations and a new account, interorg profit, captures the difference
between the sending organization cost and the transfer price.
Direct Transfer
Receiving Organization uses actual costing

The following table provides the distribution for inventory transfers from process to
discrete organization (actual costing):
Organization Journal Line Type Debit Credit
Sending Interorg Receivables Transaction Qty x

Transfer Price
Sending Inventory Valuation Transaction Qty x

Sending Organization
Cost
Sending Freight Expense Freight

Account
Sending Interorg Profit [Transaction Qty x

Transfer Price] –
[Transaction Qty x
Transfer Price +
Freight]
Receiving Inventory Valuation Transaction Qty x

Transfer Price
Receiving Interorg Payables Transaction Qty x

Transfer Price
Receiving Organization uses Standard Costing

Transfer Price

Cost

Account

Sending Interorg Profit [Transaction Qty x

Transfer Price] -
[Transaction Qty x
Sending Org Cost +
Freight]

Receive Organization
Cost

Transfer Price
Receiving PPV Transaction Qty x

[Transfer Price -
Cost]
Intransit Transfer (through inventory Transfer or internal Order) FOB Shipping

Receiving Organization uses Actual or Average Costing
After Shipment

Transfer Price

Cost
Sending Interorg Profit Transaction Qty x

[Transfer Price –
Cost]
Receiving Intransit Inventory Transaction Qty x

Transfer Price +
Freight


Transfer Price
Receiving Freight Expense Freight

Account
After Receipt

Transfer Price +
Freight

Transfer Price +
Freight
Receiving Organization uses Standard Costing
After Shipment

Transfer Price

Cost

[Transfer Price –
Cost]

Cost

Transfer Price

Receiving Freight Expense Freight

Account

[Transfer Price +
Freight - Transaction
Qty x Receive
Organization Cost]
After Receipt

Cost

Cost
Intransit Transfer (through inventory Transfer or internal Order) FOB Receiving

After Shipment
Sending Intransit Inventory Transaction Qty x

Cost

Cost
After Receipt

Transfer Price


Cost

Account

Transfer Price –
[Transaction Qty x
Sending
Organization` Cost +
Freight]

Transfer Price

Transfer Price
Receiving Organization uses standard costing
After Shipment

Cost

Cost
After Receipt

Transfer Price


Cost

Account

Transfer Price –
[Transaction Qty x
Sending
Organization` Cost +
Freight]

Cost

Transfer Price

[Transfer Price –
Receiving
Organization Cost]
Intercompany Transfers Using Internal Orders

Intercompany Transfers with Invoicing – FOB Shipping
After Shipment
Sending COGS Transaction Qty x

Cost


Cost

Transfer Price
Receiving Intercompany Transaction Qty x

Expense Transfer Price
After Receipt

Transfer Price

Transfer Price
Following Accounting Distributions are created for Internal Orders receipts when you
select the Purchase Price Variance - Internal Orders option as Book INV at Item Cost
(PPV) on the Event Fiscal Policy window:
Intercompany Transfers without Invoicing – FOB Shipping
Receiving Inventory Valuation Item cost in Receiving

Org
Receiving Intransit Inventory Item cost in Receiving

Org
Receiving Intransit Inventory Item cost in Receiving

Org
Receiving Purchase Price Item cost in Receiving

Variance Org - Transfer Price
Receiving Interorg Payables Transfer Price
Shipping Interorg Receivables Transfer Price

Shipping Interorg Profit Item Cost in Shipping

Org - Transfer Price
Shipping Inventory Valuation Item Cost in Shipping

Org
Following Accounting Distributions are created for Internal Orders receipts when you
select the Purchase Price Variance - Internal Orders option as Book INV at Transfer
Price (No PPV) on the Event Fiscal Policy window:
Receiving Inventory Valuation Transfer Price
Receiving Intransit Inventory Transfer Price
Receiving Intransit Inventory Transfer Price
Receiving Purchase Price Nil Nil

Variance
Receiving Interorg Payables Transfer Price
Shipping Interorg Receivables Transfer Price
Shipping Interorg Profit Item Cost in Shipping

Org - Transfer Price
Shipping Inventory Valuation Item Cost in Shipping

Org
Intercompany Invoicing Distributions (created by Intercompany Invoicing programs

and not by OPM)
Sending Intercompany Transaction Qty x

Receivables Transfer Price


Revenue Transfer Price


Payable Transfer Price
Receiving Organization uses standard Costing
After Shipment

Cost

Cost

Receiving
Organization Cost

After Receipt

Transfer Price

Transfer Price

and not by OPM)





Intercompany Transfers with Invoicing – FOB set to Receiving

Receiving Organization is Actual or Average Costing
After Shipment

Cost

Cost
After Receipt

Cost

Cost

Transfer Price



and not by OPM)




Receiving Organization set to Standard Costing
After Shipment

Cost

Cost
After Receipt

Cost


Cost

Receiving
Organization Cost


[Transfer Price –
Receiving
Organization Cost]

and not by OPM)




OPM Costing Distribution

Inventory Revaluation also known as Cost Revaluation
OPM lets you revalue inventory account balances as a result of a change in item cost
between two costing periods. It is done by building additional GL journal entries in the
Subsidiary Ledger to update the INV account balance in the current period.

Unlike other transactions, the posting date for cost revaluation is determined by the GL
transaction date (entered in the Fiscal Policy of legal entity) when the accounting
preprocessor is run.
Each journal entry is created so that there is an association back to the respective item
and organization. As a result, when the accounting process books entries to the table,
individual entries are created for every item and organization combinations.
When the accounting process is run, the period balance entries are marked as posted.
Once the transactions are posted, they are marked as posted and are not picked up
again.
The following table provides the inventory revaluation distribution:
INV [(Prior Period Inventory

Balance) x (Current Period
Total Item Cost - Prior Period
Total Item Cost)]
IRV [(Prior Period Inventory

Balance) x (Current Period
Total Item Cost - Prior Period
Total Item Cost)]
If the current period cost is less than the prior period cost, then reverse entries are
created.
Subledger Entries for Average Cost Adjustment Type
The following table shows the distribution for Actual Cost Adjustment with the
Average Cost Adjustment type:
Account Title Debit Credit Maintain Quantity
INV Adjustment Quantity Yes

* (Adjustment Cost -
Item Cost)
CAD Adjustment Quantity No

* (Adjustment Cost -
Item Cost)
Subledger Entries for Value Adjustment Type

The following table shows the distribution for Actual Cost Adjustment with the Value

Adjustment type:
INV Adjustment Value Yes
CAD Adjustment Value No
Subledger Entries for Unit Cost Adjustment Type

The following table shows the distribution for Actual Cost Adjustment with the Unit
Cost Adjustment type:
INV Actual Cost

Calculation Quantity
* Unit Cost
Adjustment
CAD Actual Cost

Calculation Quantity
* Unit Cost
Adjustment
Production Distribution
There are several stages in a production cycle; Batch Release, Step Completion, Batch
Completion, and Batch Close. At each stage, different types of transactions are
generated. This topic shows the event type and journal line types distribution templates
used for each of these transactions.
Release represents the release of a production batch, the process in which the batch
status is changed from Pending to WIP.
Note: The unrelease of a production batch is represented by the same

event RELE with the debits and credits reversed. This process
withdraws the batch from WIP and reinstates it as Pending.
Step is used for completing a routing step in a production batch. The resources used on
the step are recorded with Routing.
Completion represents the certification of a production batch, the process of confirming
an output and changing the status from WIP to Completed.

The Step and Completion are not the final reporting of usage and yield in a production
batch. Even after these events occur, adjustments can still be made to ingredients,
byproducts, coproducts, and product quantities. The same is the case with resource
count and resource usage of production routing. The adjustments made after Step and
Completion, but before the batch close, are reported as additional entries to Step and
Completion at the time they occur.
Close represents the final close of a production batch indicating that all transactions
have been completed. This prevents any further transactions against the closed batch
and the status is changed to Close.
At each event, distributions are created for each of the ingredients, products,
byproducts, and coproducts. Every activity line with Routing within an operation step
has its own distribution as well.
Distributions for items that are non-stockable and non-transactable will not appear in
the accounting entries in OPM.
Cost Formula Scaled Amounts versus Actual Amounts
When calculating variances at batch close, the system compares the actual amounts to
the cost formula scaled amounts. The variances are only calculated for batches in legal
entities using standard costs, which requires that a Cost Rollup process was performed.
These variances measure differences between the actual production reported and a legal
entity's cost standard for that production.
The actual amount is derived from the actual usage of ingredients, byproducts,
products, and coproduct quantities in batch records. However, the actual amounts are
not compared to planned quantities in batch records, but to cost formula scaled
quantities for financial variance calculations.
To determine the cost formula scaled quantity, the system finds the cost formula used to
rollup the cost of the primary product. The system determines the scaling factor by
comparing the planned or actual output based on a profile. After the scaling factor is
determined, all ingredients, byproducts, and coproducts are scaled appropriately
depending on their scale type.
However, if any ingredients, byproducts, or coproducts are not scaled proportionally,
then a different method is used. First, all quantities are converted to the yield type
standard unit of measure. Next, the product quantity in the batch is compared with the
cost formula to determine the scaling factor. Finally, the ingredients, byproducts, and
coproducts are scaled proportionally. These cost formula scaled quantities are used for
variance calculations. See: Oracle Process Manufacturing Product Development User's Guide
for details on scaling functionality.
Cost Type
Each legal entity has a corresponding fiscal policy in OPM. Within that fiscal policy
record, you can define the Cost Type to be used for building account distributions.
Whether the specified cost method is a standard cost, an actual cost, or a lot cost type
changes how the production event distributions are generated.

Variance Types
The accounting journal entries for Process Execution consists of the following variance
types:
• Scale the costing formula to planned quantity of the primary product in the batch
and compare with the actual batch (hereafter referred to as Scale to Plan)
The accounting process uses this method to calculate variances. This is the existing
method.
• Scale the costing formula to actual quantity of the primary product in the batch and
compare with the actual batch (hereafter referred to as Scale to Actual)
This method is similar to the Scale to Plan except for the costing formula scaling.
The costing formula is scaled to the actual output of the primary product in the
batch. As a result, there are no yield or usage variances for the primary product.
• Use the aggregate type variances (hereafter referred to as Aggregate)
Two profile options, GMF: Subledger Variance Type for Production Bookings and GMF:
Log All Subledger Variances to a Separate Table, are added to calculate production
variances using the three variance types or log all variances to a separate table.
GMF: Subledger Variance Type: This profile option contains the variance type which
the subledger process uses to calculate and post variances for the production
transactions. Specify any of the listed variance types as a value. The valid values are,
Scale to Plan, Scale to Actual, or Aggregate. The default value is Scale to Plan.
GMF: Log All Subledger Variances: This profile option calculates variances for all of the
above variance types and stores them in a separate table for analysis. If this profile
value is set to Yes, then the subledger process calculates variances for all of the three
variance types and stores them in a separate table. If the profile value is set to No, then
the subledger variances are not logged to the separate table. The default value is No.
The subsequent paragraphs provide an example of the Scale to Plan and Scale to Actual
variance types.
Example:
This example describes how using the same formula and same batch yields you can
achieve different results when using two variance types.
Consider that you are creating product A that consists of ingredients B and C. The
costing formula for making Product A with ingredients B and C is:
100 (A) = 50 (B) + 50 (C) Costing formula
Create a planned batch for 1000 quantity for product A with 500 quantity of ingredients
B and C.
1000 (A) = 500 (B) + 500 (C) Planned batch
The actual output of Product A is 900 with 450 quantity usage of ingredients B and C.

900 (A) = 450 (B) + 450 (C) Actual batch
In the case of Scaled to Plan variance type, the costing formula is scaled to the planned
quantity of the primary batch and compared with the actual batch. The resulting
variance is calculated as follows for this example:
Scaled Costing Formula = 1000 (A) = 500 (B) + 500 (C)
Yield Variance = (1000 - 900) x Product Cost (A)
Usage Variance = (500 - 450) x Ingredient Cost (B)
Usage Variance = (500 - 450) x Ingredient Cost (C)
In the case of Scaled to Actual variance type, the costing formula is scaled to the actual
quantity of the primary batch and compared with the actual batch. Since the costing
formula is scaled to actual batch and compared with the actual batch, there is no yield
variance or usage variance for both product and ingredients.
The subsequent paragraphs describe the subledger postings for the Scale to Plan and
Scale to Actual variance types. The subledger posting for Aggregate variance type is
explained later in this topic.
In Process Execution, when a lab batch is created you can specify whether to update
inventory by checking the Update Inventory box. If you do not check this box, then the
work-in-process organization is set to null. In this case, no inventory transactions are
created and the subledger process ignores these batches. As a result, the variances are
not calculated.
Validity Rule Override
You can override the planned process loss at the validity rule level. The planned
process loss value is taken from the validity rule, if available. Otherwise, it is calculated
from the recipe along with the theoretical loss table for the validity rule standard
quantity. The Accounting process considers the planned process loss override during
variance calculations.
Production Distribution without Routing using Standard Costing

Batch Release
Several transactions can occur within this event. These transactions include:
• Release production batches
• Adjustments to released quantities
• Unrelease production batches
The unrelease process creates a reverse entry. Debits become credits and credits become
debits, using the same template.
The following table provides the distribution for production batch release without
routing using standard costing:

INV [Actual Ingredient Input Qty

x Batch Organization Total
Item Cost]
WIP [Actual Ingredient Input Qty

x WIP Warehouse Item
Material Cost + WIP
Warehouse Item Burden Cost]
RCA [Actual Ingredient Input Qty

x (WIP Warehouse Item
Resource Cost + WIP
Warehouse Item
StandardCost Adjustment
Cost)]
Batch Completion
Within OPM production batches, several inventory transactions can occur during and
after a batch completion. These transactions include:
• Completing production batch on the material side
• Adjustment to quantities consumed and yielded which are ingredients, byproduct,

and coproducts
The following table provides the distribution for production batch certification without
Routing using standard costing:
INV [Actual Product Output Qty x

Item Total Cost]
WIP Actual Product Actual Product Output Qty x

[Item Lower Level Costs +
Item This Level Material Cost]
OVH Actual Product Output Qty x

Item This Level Overhead
Cost

RCA [Actual Product Output Qty x

(WIP Warehouse Item
Resource Cost + WIP
Warehouse Item Standard
Cost Adjustment Cost)]
Batch Completion journal entries are posted for products, coproducts, and byproducts
only.
Batch Close
After a production batch is closed, variances are calculated and reported in the journal
entries if standard costing is used. These variances include:
• Usage Variance (USG)
• Substitution Variance (SUB)
• Yield Variance (YLD)
• Closing Variance (CLS)
The Actual Total Product Output Quantity is calculated as the sum of the yield of all
products, byproducts, and coproducts.
In some cases, there can be a batch close variance if ingredient consumptions and
product yields are recorded in a period, and in the next period the ingredient, resource,
or byproduct consumptions for these batches are updated without any further product
yields.
Usage Variance
When the Actual Ingredient Input quantity is greater than the Cost Formula Scaled
Ingredient Input.
If the quantity difference is negative, then the template is reversed. The debits become
credits and the credits shown below become debits.
The following table provides the distribution for production batch close usage variance
without Routing using standard costing:

USG [(Actual Ingredient Input Qty

- Cost Formula Scaled
Ingredient Input Qty) x Batch
WIP [(Actual Ingredient Input Qty

Substitution Variance
When different ingredients not on the cost formula are added to a batch, the following
journal entries are posted.
The following table provides the distribution for production batch close substitution
variance when different ingredients (not on the cost formula) are added to a batch:
SUB [Actual Substituted

Ingredient Input Qty x Batch
WIP [Actual Substituted

variance when cost formula ingredients are missing from a batch:
SUB [Missing Cost Formula Scaled

WIP [Missing Cost Formula Scaled


Yield Variance
variance when the quantity yielded is different from the cost formula scaled amount:
YLD [(Actual Product Output Qty -

Cost Formula Scaled Product
Qty) x Batch Organization
Total Item Cost]
WIP [(Actual Product Output Qty -

Item Material Cost + Lower
Level Costs + This Level
Standard Adjustment Cost]
RUV [(Actual Product Output Qty -

Qty) x (Batch Organization
Item Resource Cost + This
Level Resource Component
Cost)]
OVH [(Actual Product Output Qty -

Qty) x This Level Overhead
Component Cost
The following table provides the distribution for production batch variance when
products, coproducts, or byproducts are added to a batch that are not on formula:
YLD [Actual Product Output Qty x

Batch Organization Total Item
Cost]
WIP [(Actual Product Output Qty

+ This Level Standard
Adjustment x Batch
Organization Item Material
Cost + Item Lower Level Cost]

RUV [(Actual Product Output Qty

x (WIP Organization Item
Resource Cost + This Level
Resource Cost)]
OVH [(Actual Product Output Qty

x (This Level Overhead
Component Cost)]
variance when the cost formula product, coproducts, or byproducts are missing from
the batch:

Total Item Cost]

Item Material Cost + Lower
Level Costs + This Level
Standard Adjustment Cost]

Qty) x (Batch Organization
Item Resource Cost + This
Level Resource Component
Cost)]
Closing Variance
The following table provides the distribution for production batch close closing
variance without Process Operation Control using standard costing:

WIP Amount to clear out the WIP

generated by all the
transactions in Release and
Completion events
CLS Offset to WIP entry
There are reasons why an amount remains in WIP and is posted to the CLS variance.
One of the typical reasons for getting a non-zero Close Variance is that the batch was
released in one cost period when the debit to WIP would be valued at one cost, but the
batch was completed in a later cost period when the credit to WIP for the same
quantities would be at a different value. So there is a remaining balance in WIP that is
entirely due to cost change but that needs to be cleared out.
With Routing using Standard Costing

Batch Release with POC
Within process manufacturing production batches, several transactions can occur
during a batch release step:
• Release production batch
• Adjustment to quantities released
• Unrelease production batch
The unrelease process creates an opposite entry. Debits become credits and credits
become debits, using the same template.
For a batch release process, when Process Operation Control is enabled the postings are
different. There is no posting to RCA because this is now done for each STEP process
and the posting to WIP is at the total of material and resource cost elements.
The following table provides the distribution for production batch release with Process
Operation Control using standard costing:

Item Cost]


x WIP Warehouse Item
Material Cost + WIP
Warehouse Item Resource
Cost +WIP Warehouse Item
Burden Cost]
RCA [Actual Ingredient Input Qty

x (WIP Warehouse Item
Standard Cost Adjustment
Cost)]
Batch Completion with Routing

Within Process Manufacturing production batches, various inventory transactions can
occur during and after a batch is completed:
• Production batch completion on the material side

coproducts
The Actual Product Output Quantity is calculated as the sum of the yield of all
For the certify process, the postings are slightly different when Process Operation
Control is enabled. There is no posting to RCA because it is done for each STEP process.
The posting to WIP is calculated as the total of material and resource cost elements.
The following table provides the distribution for production batch completion with

Item Total Cost]
WIP [Actual Product Output Qty x

WIP Warehouse Item
Material Cost + WIP
Warehouse Lower level Item
Burden Cost]

OVH [Actual Product Output Qty x

WIP Warehouse This Level
Burden Cost Component]

(WIP Warehouse Item
Standard Cost Adjustment
Cost)]
Step Completion with Routing

Within Process Manufacturing production batches, several transactions related to
resource consumption can occur during and after the Completion phase:
• Complete production batch step on the resource side
• Adjustment to quantities consumed and yielded on the resource side
The following table provides the distribution for production step completion with
WIP [Actual Total Resource Usage

x Resource Cost]
RCA [Actual Total Resource Usage

x Resource Cost]
If the batch has step dependent release of ingredients, the application also creates
entries to the INV, WIP, (for the ingredients) and IVV accounts. These entries will
appear as RELE entries.
Batch Close with Routing
After a production batch is closed, variances are calculated and reported through
journal entries if standard cost is used:
• Usage Variance (USG)
• Substitution Variance (SUB)
• Yield Variance (YLD)

• Closing Variance (CLS)
The following three additional variances are calculated when Process Operation Control
is used:
• Resource Usage or Efficiency Variance (RUV)
• Resource Substitution or Method Variance (RSV)
• Resource Manning Variance (RMV)
Usage Variance
When the actual ingredient input quantity is greater than the cost formula scaled
ingredient input:
The following table provides the distribution for production batch close usage variance
with Routing using standard costing:
USG [(Actual Ingredient Input Qty

WIP [(Actual Ingredient Input

Quantity - Cost Formula
Scaled Ingredient Input Qty)
x (Batch Organization Item
This Level Material Cost +
Batch Organization This Level
Item Resource Cost + Item
Lower Level Cost]
OVH [(Actual Ingredient Input

x (Batch Organization Item
This Level Overhead Cost)]

RCA [(Actual Ingredient Input

x (This Level Standard Cost
Adjustment)]
If the quantity difference is negative, then the postings are reversed. Debits become
credits and credits become debits.
Substitution Variance
variance when different ingredients not on the cost formula are added to a batch:
SUB [Actual Substituted

WIP [Actual Substituted

Ingredient Input Qty x (Batch
Organization Item This Level
Material Cost + WIP
Resource Cost)]
RUV [Actual Substituted

Ingredient Input Qty x
(Organization Item This Level
Standard Cost Adjustment)]
OVH [Actual Substituted

Ingredient Input Qty x This
Level Overhead Component
Cost]
variance when the cost formula ingredients are missing from the batch:

SUB [Missing Cost Formula Scaled

WIP [Missing Cost Formula Scaled

Ingredient Input Qty x (Batch
Material Cost + Organization
Item This Level Resource Cost
+ Item Lower Level Cost)]
RCA [Missing Cost Formula Scaled

Ingredient Input Qty x
(Organization Item This Level
OVH [Missing Cost Formula Scaled

Ingredient Input Qty x Item
This Level Overhead Cost]
Yield Variance
The following table provides the distribution for production batch close yield variance
when the quantity yielded is different from the cost formula scaled amount:

Total Item Cost]

Item This Level Material Cost
+ Lower Level Cost]

OVH [(Actual Product Output Qty -

Item This Level Material Cost
+ Lower Level Cost + Item
This Level Overhead Cost]

Qty) x (Organization Item
This Level Resource Cost +
The following table provides the distribution for production batch yield variance when
different products, coproducts, or byproducts are added to a batch:
YLD [Actual Product Output Qty x

Batch Organization Total Item
Cost]

Batch Organization Item This
Level Material Cost + Lower
Level Cost]
RUV [(Actual Product Output Qty

x (Organization Item This
Level Resource Cost +
OVH [(Actual Product Output Qty

x (Organization Item This
Overhead Cost)]
variance when the cost formula product, coproducts, or byproducts are missing from
the batch:

YLD [Cost Formula Scaled Product

Qty x Batch Organization
Total Item Cost]
WIP [Cost Formula Scaled Product

Qty x Organization Item This
Level Material Cost + Lower
Level Cost]
RUV [Cost Formula Scaled Product

Qty x (Organization Item This
OVH [Cost Formula Scaled Product

Qty x (Organization Item This
Overhead Cost)]
Resource Usage or Efficiency Variance

The following table provides the distribution for production batch close resource usage
or efficiency variance when the cost formula products, coproducts, or byproducts are
missing from the batch:
RUV [(Actual Total Resource Usage

- (Actual Resource Count x
Cost Formula Activity Factor
x Cost Formula Scaled
Resource Usage)) x Resource
Cost]
WIP [(Actual Total Resource Usage

- (Actual Resource Count x
Cost Formula Activity Factor
x Cost Formula Scaled
Resource Usage)) x Resource
Cost]

Resource Substitution Variance
The following table provides the distribution for production batch close resource
substitution variance when new resources are added to the batch routing:
RSV [Substitute Resource Total

Resource Usage x Resource
Cost]
WIP [Substitute Resource Total

Resource Usage x Resource
Cost]
substitution or method variance when the resources on the cost formula are not in the
batch routing:
RSV [(Cost Formula Count x Cost

Formula Activity Factor x
Cost Formula Scaled Resource
Usage) x Resource Cost]
WIP [(Cost Formula Count x Cost

Formula Activity Factor x
Cost Formula Scaled Resource
Usage) x Resource Cost]
Resource Manning Variance

manning variance:
RMV [(Actual Resource Count -

Cost Formula Resource
Count) x Cost Formula Scaled
Resource Usage x Activity
Factor x Resource Cost]

WIP [(Actual Resource Count -

Cost Formula Resource
Count) x Cost Formula Scaled
Resource Usage x Activity
Factor x Resource Cost]
Closing Variance
variance with Process Operation Control using standard costing:

transactions in Release,
Certification, Step and Close
events
Released in one cost period when the debit to WIP would be valued at one cost, but the
batch was Completed in a later cost period when the credit to WIP for the same
quantities would be at a different value. So you have a balance left in WIP that is
entirely due to cost change but that needs to be cleared out.
Aggregate Variance Posting using Standard Costing

This method calculates the Aggregate type variances. The aggregate type variances are
applicable to certain industries that might need the average unit cost of Ingredients or
Products used in variance computations. These industries could also have substandard
product items (SSP items) and want to record the usage of these items in producing a
batch. This allows variances to be considered on a per unit of products yielded
regardless of individual products.
The Aggregate method initiates the following types of variances calculation.
Evolution Variance (ECO)
Evolution Variance is the difference between the actual costing formula and the
planned formula. This variance considers changes to ingredients, batch size, routing,
operation, activity factor, charges, and step quantities.

The following table provides the distribution for production batch close with Routing
using standard costing:
ECO (Planned Product Cost per

Unit - Standard Product Cost
per Unit) x Total Actual
Product Qty
WIP (Planned Product Cost per

Unit - Standard Product Cost
per Unit) x Total Actual
Product Qty
The subsequent paragraphs describe the details of the calculations.

Planned Product Cost per Unit The planned product cost is calculated as:
Planned Product Cost per Unit = (Planned Material Cost per Unit + Planned Conversion
Cost per Unit)
The following paragraphs describe how the planned material cost and conversion costs
per unit are calculated:
• Planned Material Cost per Unit = (Total Planned Regular Ingredient Amount - Total
Planned Byproduct Amount) x (Total Planned Regular Ingredient Qty / Total
Planned Yield Qty)) / Planned Standard Size
• Planned Conversion Cost per Unit = (Total Planned Conversion Cost / Planned
Batch Size) x (Total Planned Regular Ingredient Qty / Total Planned Yield Qty)
Standard Product Cost per Unit

The standard product cost is calculated as:
Standard Product Cost per Unit = (Standard Material Cost per Unit + Standard
Conversion Cost per Unit)
The following paragraphs describe how the standard material cost and conversion costs
per unit are calculated:
• Standard Material Cost per Unit = (Total Standard Regular Ingredient Amount -
Total Standard Byproduct Amount) x (Total Standard Regular Ingredient Qty /
Total Standard Yield Qty)) / Standard Batch Size
• Standard Conversion Cost per Unit = (Total Standard Conversion Cost / Standard
Batch Size) x (Total Standard Regular Ingredient Qty / Total Standard Yield Qty)
Total Actual Product Quantity

The total actual product quantity is calculated as:
Total Actual Product Quantity = Total Actual Regular Ingredient Qty - Total Actual
Byproduct Qty - (Total Actual Regular Ingredient Qty x Actual Process Loss)
Gain on Usage Variance (GOU)
Occasionally, materials loose their financial value over a period of time. When such
materials are used in production, you have a gain. This gain is posted as the gain on
usage variance. The amount of gain is the difference between the cost of devalued
material and the cost of the same material if obtained at the time of batch consumption.
GOU (Total Planned SSP Item

Amount - Total Actual SSP
Item Amount) x Total Actual
SSP Item Qty
WIP (Total Planned SSP Ingredient

Amount - Total Actual SSP
Ingredient Amount) x Total
Actual SSP Ingredient Qty
• The substandard product (SSP) items are set up as new item

category set in the Oracle Process Manufacturing Inventory
Management application.
• The byproducts are ignored.

Total Planned SSP Item Amount
The total planned SSP Item amount is calculated as:
Total Planned SSP Item Amount = (Total Planned SSP Item Amount + Total Planned
SSP Item Qty) / Total Planned SSP Item Qty
Total Actual SSP Item Amount
The total actual SSP Item amount is calculated as:
Total Actual SSP Item Amount = Total Actual SSP Item Amount / Total Actual SSP Item
Qty
Substitution Usage Variance (SUB)

Substitution Usage Variance is the difference between the cost of planned ingredients
and the cost of actual ingredients used in a batch. When ingredient cost is calculated,
the substandard product item is valued at the regular ingredient cost. This is because
the gain of SSP material usage is already recorded as the Gain on Usage variance.
SUB (Actual Ingredient Cost per

Unit- Planned Ingredient Cost
per Unit) x Actual Net
Ingredient Quantity
WIP (Actual Ingredient Cost per

Unit- Planned Ingredient Cost
per Unit) x Actual Net
Ingredient Quantity

Actual Ingredient Cost per Unit
The actual ingredient cost per unit is calculated as:
Actual Ingredient Cost per Unit = Total Actual Regular Ingredient Amount / ((Total
Actual Regular Ingredient Qty + Total Actual SSP Item Qty) - Total Actual Byproduct
Qty)
The following paragraphs describe how the total actual regular ingredient amount and
cost are calculated:
• Total Actual Ingredient Total Amount = ((Actual Regular Ingredient Cost) x Total
Actual SSP Item Qty) + Total Actual Regular Ingredient Amount - Total Actual
Byproduct
• Amount Total Actual Regular Ingredient Cost = (Total Actual Regular Ingredient
Amount - Total Actual By product Amount) / (Total Actual Regular Ingredient Qty
- Total Actual Byproduct Qty)
Planned Ingredient Cost per Unit

The planned ingredient cost per unit is calculated as:
Planned Ingredient Cost per Unit = Total Planned Regular Ingredient Amount / ((Total
Planned Regular Ingredient Qty + Total Planned SSP Item Qty) - Total Planned
Byproduct Qty)
The following paragraphs describe how the total planned regular ingredient amount

and cost are calculated:
• Total Planned Ingredient Total Amount = ((Planned Regular Ingredient Cost) x
Total Planned SSP Item Qty) + Total Planned Regular Ingredient Amount - Total
Planned Byproduct Amount
• Total Planned Regular Ingredient Cost = (Total Planned Regular Ingredient Amount
- Total Planned Byproduct Amount) / (Total Planned Regular Ingredient Qty - Total
Planned Byproduct Qty)
Net Ingredient Qty

The net ingredient quantity is calculated as:
Net Ingredient Qty = Total Actual Regular Ingredient Qty + Total Actual SSP Item Qty -
Total Actual Byproduct Qty
Yield Variance (YLD)
Yield Variance is the difference between the cost of planned ingredients and the actual
output.
YLD [{Total Actual Input Qty -

(Total Actual Input Qty x
Planned Process Loss)} - Total
Actual Output Qty] x
Average Planned Ingredient
Cost
WIP [{Total Actual Input Qty -

(Total Actual Input Qty x
Planned Process Loss)} - Total
Actual Output Qty] x
Average Planned Ingredient
Cost

Total Actual Input Qty
The total actual input quantity is calculated as:
Total Actual Input Qty = Total Actual Regular Ingredient Qty + Total Actual SSP Item
Qty - Total Actual Byproduct Qty
Planned Process Loss

The planned process loss is calculated as: Planned Process Loss = (Total Planned Input
Qty - Total Planned Output Qty) / Total Planned Input Qty
The following paragraphs describe how the total planned input and output quantities
are calculated:
• Total Planned Input Qty = Total Planned Regular Ingredient Qty + Total Planned
SSP Item Qty - Total Planned Byproduct Qty
• Total Planned Output Qty is the total of planned output quantity for all the
products
Total Actual Output Qty

The total actual output quantity is calculated as:
Total Planned Output Qty is the total of planned output quantity for all the products
Average Planned Ingredient Cost
The average planned ingredient cost is calculated as:
Average Planned Ingredient Cost = Total Planned Regular Ingredient Amount / ((Total
Planned Regular Ingredient Qty + Total Planned SSP Item Qty) - Total Planned
Byproduct Qty)
Batch Size Variance (RUV)
Batch Size Variance captures the difference in resource usages by comparing the actual
conversion cost at actual batch size with the planned batch size.
RUV [(Actual Conversion Cost per

Unit at Actual Batch Size -
Actual Conversion Cost per
Unit at Planned Batch Size) x
Total Actual Product Qty]
WIP [(Actual Conversion Cost per

Unit at Actual Batch Size -
Actual Conversion Cost per
Unit at Planned Batch Size) x
Total Actual Product Qty]

Actual Conversion Cost per Unit at Actual Batch Size

The actual conversion cost per unit at the actual batch size is calculated as:
Actual Conversion Cost per Unit = Total Actual Conversion Amount / Total Actual
Output Qty
Actual Conversion Cost per Unit at Planned Batch Size
The actual conversion cost per unit at the planned batch size is calculated as:
Actual Conversion Cost per Unit = Total Planned Conversion Cost / Total Actual
Output Qty
Nonstandard Routing Variance (RSV)
The Nonstandard Routing Variance captures the substitution of resources by comparing
the actual conversion cost at the actual batch size and planned conversion cost at the
actual batch size.
RSV [(Actual Conversion Cost per

Unit - Planned Conversion
Cost per Unit) x Total Actual
Product Qty] - RUV
WIP [(Actual Conversion Cost per

Unit - Planned Conversion
Cost per Unit) x Total Actual
Product Qty] - RUV

Actual Conversion Cost per Unit
The actual conversion cost per unit at the actual batch size is calculated as:
Actual Conversion Cost per Unit = Total Actual Conversion Amount / Total Actual
Output Qty
Planned Conversion Cost per Unit
The planned conversion cost per unit at the actual batch size is calculated as:
Planned Conversion Cost per Unit = Total Planned Conversion Cost / Total Actual
Output Qty
Batch Variance Rounding (CLS)
variance with Process Operation Control using standard costing:


transactions in Release,
Certification, Step, and Close
events.
CLS Offset to WIP entry.
released in one cost period when the debit to WIP is valued at one cost. The batch was
completed in a later cost period when the credit to WIP for the same quantities is at a
different value. As a result, you have a balance left in WIP that is entirely due to a cost
change but it needs to be cleared out.
Batch Release without Routing in Actual Costing

Within OPM production batches, several transactions can occur during a batch release:
• Production batch release
• Production batch unrelease
The unrelease process creates an opposite entry. Debits become credits and credits
become debits, using the same template.
The following table provides the distribution for production batch releases without
Routing using actual costing:

Item Cost]

x (Organization Item Total
Material Cost)]
Batch Completion
Within OPM production batches, inventory transactions occur during and after a batch

is certified:
• Completion of production batch on the material side

and coproducts
The following table provides the distribution for production batch completion without


(Organization Item Material
Cost + Ingredient Cost +
Organization Item Resource
Cost)]

Cost + Ingredient Cost +
Organization Item Resource
Cost)]

(Organization Item Overhead
Cost)]
ALC [Actual Product Output Qty x

(Organization Item GL
Allocation Cost)]
Batch Close
When a production batch is closed, no detailed variances are calculated for companies
using actual costing. The remaining WIP amount is cleared and posted as the CLS
account, Closing Variance (CLS).
Closing Variance
variance without Process Operation Control using actual costing:


Certification events
There are reasons why amounts are posted to the close variance:
• You can get a non-zero close variance if the batch was released in one cost period
and the debit to WIP is valued at one cost, but the batch was completed in a later
cost period when the credit to WIP for the same quantities is valued at a different
cost. This results in a left over balance WIP due to the cost change and must be
cleared out.
• If you book batches using average cost with PWAC, then batches will have either a
positive or a negative difference. During the period, they balance each other out.
• If you select an average actual costing with PMAC, then the costs include period
ending balance which results in a variance.
Batch Release With Routing using Actual Costing

Batch Release with Routing
Within OPM production batches, transactions can occur during a batch release:
• Release production batch
• Unrelease production batch
Adjustment to quantities released Unrelease production batch The unrelease process

creates an opposite entry. Debits become credits and credits become debits, using the
same template.
For the release process, the postings are slightly different when Process Operation
Control is enabled. There is no posting to RCA because it is done for each STEP process.
The posting to WIP is calculated at the total of material and resource cost elements.
The following table provides the distribution for production batch release with Routing
using actual costing:


x Organization Total Item
Cost]

x (Organization Item Total
Material Cost)]
Batch Completion with Routing

Within OPM production batches, inventory transactions can occur during and after a
batch is certified:
• Completion of production batch on the material side

coproducts
For the certify process, the postings are slightly different when Routing is enabled.
There is no posting to RCA because it is done for each STEP process. The posting to
WIP is calculated at the total of material and resource cost elements.
The following table provides the distribution for production batch completion with


Cost + Organization Item
Resource Cost)]

(Organization Item Overhead
Cost)]

ALC [Actual Product Output Qty x

(Organization Item GL
Allocation Cost)]
Step Certification with POC

Within OPM production batches, several transactions related to resource consumption
can occur during and after the certification phase:
• Step completion of production batch on the resource side
• Adjustment to quantities consumed and yielded on the resource side
The following table provides the distribution for production step certification with
WIP [Actual Resource Count x

Actual Resource Usage x
Resource Cost]
RCA [Actual Resource Count x

Actual Resource Usage x
Resource Cost]
If the batch has step dependent release of ingredients, the application also creates
entries to the INV, WIP for the ingredients, and IVV accounts.
Batch Close with Routing
When a production batch is closed, variances are not calculated for Actual Costing
companies. Any remaining WIP amount is cleared and posted to the CLS account:
Closing Variance (CLS)
using actual costing:


Certification events
There are three reasons why amounts are posted to the close variance:
• You might get a non-zero close variance if the batch was released in one cost period
and the debit to WIP is valued at one cost, but the batch was completed in a later
cost period when the credit to WIP for the same quantities is valued at a different
cost. This results in a left over balance WIP due to the cost change and must be
cleared out.
• If you book batches using average cost with PWAC, then batches will have either a
positive or a negative difference. During the period, they balance each other out.
• If you select an average actual costing with PMAC, then the costs include period
ending balance which results in a variance.
Oracle Order Management Distribution for Process Organization
Order Management Shipments

For Order Management, accounts for revenue are done through AutoAccounting in
Oracle Receivables since Invoicing is done in Oracle Receivables. Oracle Receivables
builds the journal entries for Sales, Accounts Receivable, Tax, Discounts, Allowances,
and Freight. SLA is responsible for posting journal entries for the inventory impact of
the shipment. Similarly, returns, credit memos, and debit memos are processed through
Oracle Receivables. SLA also reports the financial impact on inventory for returns
affecting inventory balances.
Depending on your business needs, you may require deferred accounting rules, which
you can create by selecting the Deferred Revenue check box during Accounting Rule
definition in Oracle Receivables. Deferred accounting rules let you defer revenue to an
unearned revenue account until you are ready to specify the revenue recognition
schedule.
At the time of shipment with COGS (OPM):

INV [Shipment Qty x Source

Organization Total Item Cost
COGS [Shipment Qty x Source

At the time of shipment with DCOGS (OPM):
INV [Shipment Qty x Source

DCOGS [Shipment Qty x Source

Deferred Cost of Goods Sold (COGS) and Revenue

Recent guidelines is to consider the contractual terms of the sale in deciding when and
what part of the revenue related to a sale can be recognized in the books. The contract
terms may include acceptance provisions, cancellation provisions, refund clauses, fiscal
funding clauses, delivery clauses, and others. These are together called as contingencies
that hold back revenue recognition. The key principle is that the revenue and expenses
matching should only happen in the period in which the contingencies are removed
and revenue is actually earned. Both the cost of sales and revenue are deferred until the
revenue is actually earned.
The material at the customer site is still owned by the supplier and hence the supplier
cannot recognize revenue and cost of sales. When customer consumes the material or
transfers it to their inventory, then it is considered as removal of the contingency
thereby releasing the hold on the revenue for the supplier.
You can run a set of concurrent processes to record sales order and revenue recognition
transactions and to create and cost COGS recognition transactions. These COGS
recognition transactions adjust deferred and earned COGS in an amount that
synchronizes the percentage of earned COGS to earned revenue on sales order
shipment lines. Run the following concurrent programs:
• Record Order Management Transactions concurrent program that records new
sales order transaction activity such as shipments and RMA returns in Oracle Order
Management.

• Revenue Recognition concurrent program determines the percentage of recognized
or earned revenue related to invoiced sales order shipment lines in Oracle
Receivables.
• Generate COGS Recognition Events concurrent program creates and costs COGS
recognition events for new sales order shipments/returns and changes in revenue
recognition and credits for invoiced sales order shipment lines.
Refer to the Oracle Receivables User's Guide for more information on the concurrent
programs.
The following are the changes to the accounting entries created at various stages.
At the time of shipment [OPM]
Deferred COGS Transaction Qty x Item Cost
INV Transaction Qty x Item Cost
When customer is billed for the entire quantity (distribution created in AR and not in
OPM)
Receivables Transaction Qty x Item Sale

Price
Deferred Revenue Transaction Qty x Item Sale

Price
When a portion of revenue is recognized a revenue recognition event is created using

the Revenue Accounting Module in AR.
Accounting entry in AR
Deferred Revenue Transaction Qty x Item Sale

Price x Recognition %

Revenue Transaction Qty x Item Sale

Price x RMA Qty x Item Cost
x Recognized %
An additional entry is also created OPM to reflect the earned revenue.
COGS Transaction Qty x Item Cost x

Recognition %
Deferred COGS Transaction Qty x Item Cost x

RMA Qty x Item Cost x
Recognized %
RMA
Before any revenue recognition
INV RMA Qty x Item Cost
DCOGS RMA Qty x Item Cost
After a portion of revenue is recognized
INV RMA Qty x Item Cost
COGS RMA Qty x Item Cost x

Recognized %
DCOGS RMA Qty x Item Cost x

Recognized %

Internal Orders
These orders represent a shipment in Order Management with a corresponding receipt
raised in Oracle Receivables to record the transfer of items from one organization to
another. The transfer can either be Direct or Intransit. When an intransit transfer is
shipped, the inventory is held in an intransit account until the goods are received.
The Accounting process considers interorganization transfer charges when booking
internal order shipments. Transfer credit is defined in the Inventory Shipping Network
as a percentage which is applied to the cost of the shipped quantity. The Accounting
process books this value under XFC (transfer credit in internal orders) while posting
Oracle Order Management and Oracle Purchasing entries in OPM. Only a predefined
percentage (a predefined percentage of the sending organization's cost) is supported for
internal orders. If the predefined percentage is set up in the shipping networks, then the
Accounting process uses it to calculate transfer credits.
If the INV: Intercompany Invoice for Internal Orders profile option is set to No, then the
entries are booked as uninvoiced internal orders.
Internal Orders - Direct Transfer with Order Management
The following table shows the distribution for direct internal orders when the
accounting process is run after the order has shipped:
INV [Shipment Qty x Ship

Organization Item Cost]
IOR [Shipment Qty x Ship

Internal Orders - Direct with Purchasing

The following table provides the distribution for direct internal orders when the item is
received and the accounting process is run for Purchasing:
INV [Receipt Qty x Receive


IOP [Receipt Qty x Ship

Organization Item Cost
converted to Receive
Organization Currency]
PPV [Receipt Qty x (Ship

Organization Item Cost -
Receive Organization Item
Cost)]
Internal Orders - Intransit Transfer

FOB Receiving
Shipping Organization to Intransit Inventory (Uninvoiced) The FOB point is established
between the from and to organizations in the Inventory Shipping Network window.
FOB point determines the owner of the intransit inventory and the transport, and
transfer expenses.
The bookings are posted for the Shipping legal entity.
The following table provides the distribution for internal orders with intransit
inventory when the accounting process is run for Order Management after shipment of
the material:

ITR [Shipment Qty x Ship

Intransit Inventory to Receiving (Uninvoiced)

The following table provides the distribution for received intransit orders when the
accounting process is run for Purchasing:

IOR [Receipt Qty x Ship

Organization Item Cost] +
Transfer Credit
ITR [Receipt Qty x Ship

XFC Transfer Credit
Intransit Inventory to Receiving Organization (Uninvoiced)

The bookings are posted for the Receiving legal entity.

IOP [Receipt Qty x Ship

Organization Currency] +
Transfer Credit
PPV [Receipt Qty x (Ship

Converted to Receive
Organization Currency-
Receive Organization Item
Cost)] - Transfer Credit
FOB Shipping
Shipping Organization to Intransit Inventory (Uninvoiced)
The following table provides the distribution for shipped internal orders with intransit
inventory when the accounting process is run for Order Management:

IOR [Shipment Qty x Ship

+Transfer Credit
XFC Transfer Credit

Shipping to Intransit Inventory (Uninvoiced)

ITR [Shipment Qty x Receive

IOP [Shipment Qty x Ship

Organization Item Cost] +
Transfer Credit
PPV [Receipt Qty x (Receive

Organization Item Cost - Ship
Organization Currency)] -
Transfer Credit
Intransit Inventory to Receiving Organization (Uninvoiced)

The bookings are posted for the Receiving OPM Legal Entity.
The following table provides the distribution for received internal orders with intransit
inventory when the subledger is run for the Purchasing entity:

INV [Receipt Qty x Receive Item

Cost]
ITR [Receipt Qty x Receive

Intercompany Invoicing
The Intercompany Invoicing routines are modified to retrieve information on internal
orders containing OPM items. Invoicing of internal orders is done only for those orders
that cross operating units. The Accounting process books entries for internal orders
differently when such orders are invoiced with invoicing between two different
operating units. The subsequent topics describe the templates used for recording
journal entries for invoiced internal orders. Refer to the Oracle Inventory User's Guide for
more details on Intercompany Invoicing functionality.
If the INV: Intercompany Invoice for Internal Orders profile option is set to Yes, then
the entries are booked as invoiced internal orders.
The profile options, INV: Intercompany Invoice for Internal Orders and CST: Transfer
Pricing Option, work closely with one another. If the INV: Intercompany Invoice for
Internal Orders profile values is set to either Yes or No, and the CST: Transfer Price
Option profile value is set to No, then the Accounting process books the entries as
uninvoiced internal orders.
If the INV: Intercompany Invoice for Internal Orders profile values is set to Yes and the
CST: Transfer Price Option profile value is set to Yes - price as not incoming cost, then
the Accounting process books different entries along with the generated Profit in
Inventory (PIN) account. If the INV: Intercompany Invoice for Internal Orders profile
values is set to Yes and the CST: Transfer Price Option profile value is set to Yes - price
as incoming cost, then the Accounting process books different entries and does not
include the Profit in Inventory (PIN) account.
Invoiced Orders and FOB Receiving
Shipping Organization to Intransit Inventory (Invoiced)
The FOB point is established between the from and to organizations in the Inventory
Shipping Network window. The FOB point determines the owner of the intransit
inventory and the transport, and transfer expenses.
The bookings are posted for the Shipping OPM Legal Entity.
The following table provides the distribution for internal orders with intransit
inventory when the subledger is run for Order Management after shipment of the
material:



Intransit Inventory to Receiving Organization (Invoiced)

COGS [Shipment Qty x Ship




AAP [Receipt Qty x Transfer Price]

Organization Item Cost)]
PIN Receipt Qty x [Transfer Price -

Ship Organization Item Cost]

Note: The profit in inventory (PIN) is booked only when the CST:
Transfer Pricing Option profile option is set to price as not incoming.
The Transfer Price is referred to as the price that is charged by one part of a legal entity
for products and services it provides to another part of the same legal entity, in order to
calculate each division's profit and loss separately. To use the Advanced Pricing feature,
set up the INV: Advanced Pricing for Inter Company Invoicing profile option to Yes.
Refer to the Oracle Inventory User's Guide, Oracle Order Management User's Guide,
and Oracle Advanced Pricing User's Guide for more details on setting up the transfer
pricing.
Note: Refer to this topic when the CST: Transfer Pricing Option profile
option is set to price as incoming.
The bookings are posted for the Receiving OPM Legal Entity.

AAP [Receipt Qty x Transfer Price]

FOB Shipping
Shipping Organization to Intransit Inventory (Invoiced)

COGS [Shipment Qty x Ship


Shipping to Intransit Inventory (Invoiced)
option is set to price as not incoming.


IOP [Shipment Qty x Transfer

Price converted to Receive
Organization Currency]
PPV [Shipment Qty x (Receive

Organization Currency)]
PIN [Shipment Qty x (Transfer

Price converted to Receive
Organization Currency - Ship
Note: The profit in inventory (PIN) is booked only when the CST:
Transfer Pricing Option profile option is set to price as not incoming.
Shipping to Intransit Inventory (Invoiced)

option is set to price as incoming.


IOP [Shipment Qty x Transfer

Price]
PPV Shipment Qty x [Transfer

Price - Receive Organization
Item Cost]

The following table provides the distribution for received internal orders with intransit
inventory when the accounting process is run for Purchasing:

ITR [Receipt Qty x Receive

Oracle Purchasing Distribution for Process Organization

Purchase order receipts from Oracle Purchasing result in two accounting entries. The
first entry records the receipt of goods into receiving inspection.

ISP Qty Received x PO price
AAP Qty Received x PO Price
For returns and corrections or adjustments, the amount is included as a debit or credit
depending on the sign of the amount.
The following table provides the distribution for purchasing vendor receipts including
vendor returns and adjustments to receipts when the Book at Item Cost is enabled in the
Event Fiscal Policy:
INV Qty Received x Item Cost
ISP Qty Received x PO Price
PPV (PO Price - Unit Cost)] x Qty

Received
When the Event Fiscal Policy is set at Book at PO Price, then the following distribution
is created:
INV Qty Received x PO Price
ISP Qty Received x PO Price
Landed Cost Adjustments

Landed cost adjustments in an LCM-enabled organization are posted to the LCA
account.
The following table provides the distribution in an LCM-enabled organization for a PO
at reciept, when the Book at Receipt is enabled in the Event Fiscal Policy:

ISP Qty Received x Receipt Price
LCA Qty Received x (Receipt Price

- PO Price)

at delivery, when the Book at PO Price is enabled in the Event Fiscal Policy:
INV Qty Received x Receipt Price

at receipt, when the Book at Item Cost is enabled in the Event Fiscal Policy:
LCA Qty Received x (Receipt Price

- PO Price)

at delivery, when the Book at Item Cost is enabled in the Event Fiscal Policy:
INV Qty Received x Item Cost

LCA Qty Received x (Item

Cost-Receipt Price)
Enhanced Drop Shipments and Global Procurement

This supports centralized procurement, volume discounts, and consolidation of
interactions with the user's suppliers and customers and so on. These are supported for
process organizations.
Drop shipment is a process where goods are shipped from a company's supplier
directly to the company's customer. The goods do not physically pass through the
company's warehouse facilities. Drop shipment is a major business trend and
businesses expect their ERP systems to support and streamline the processes to meet
their needs in this area. Oracle's existing drop shipment support is limited to one
operating unit, and assumes that both the supplier and the customer are external
parties.
There is a need for an extension of the current solution to support internal parties.
Accordingly, drop shipments should be possible where the supplier is a related party
(another organization of the same enterprise). Drop shipment should also be possible
where the customer is a related party (another organization of the same enterprise). All
intercompany accounting to transfer the liability for goods and related costs should be
automated.
With Global Procurement, Oracle Purchasing enables material requested by an
organization in one Operating Unit, Legal Entity, and Ledger to be procured through a
different Operating Unit, Legal Entity, and Ledger. Receiving allows receipts in an
organization against Post originating in any Operating Unit, Legal Entity, Ledger, if the
ship-to organization on the PO is that organization.
In external drop shipment scenarios where shipments are made directly from the
supplier to the customer, intercompany revenue and COGS are fully recognized. The
revenue and COGS deferrals take place only in the customer-facing booking operating
unit.
OPM Cost Management supports and performs the accounting for both physical and
financial flows in intercompany transactions. Many companies distribute goods from a
central location to parties located in other locations. These goods, or drop shipments,
can pass to a controlled entity or subsidiary in the country of sales before shipping to
the customer.
Corporations create a diverse set of operating unit, organization, entity, and ledger
combinations to facilitate this business flow. Global procurement enables Oracle
Purchasing to request material from these operating unit combinations to other
operating units. Oracle Inventory creates transactions that do not generate material

movements, but are used for invoicing and accounting purposes. Procurement and sales
transactions are performed across these operating units.
Transactions can impact several organizations and operating units requiring a complex
sequence of linked accounting entries. This functionality supports:
• Shared procurement services: If a purchase order is placed by one operating unit,
and shipped to another operating unit, then the procurement operating can invoice
the receiving operating unit. The invoice is posted at either the purchase order price
or the transfer price. The accounting transactions represents a transfer of ownership
between the operating units.
• Ownership transfer for shipments: You can generate a transfer of ownership when
shipping a sales order where the operating units are separate for selling and
shipping. The intercompany invoice uses the transfer price.
• Drop ship across ledgers: On a drop shipment sales order, the warehouse
organization and sales order organization can use different ledgers. Intercompany
relationships: You can define chains of operating units for selling, procurement,
shipping, and receiving. Ownership of the goods is transferred during transactions.
• Intercompany invoices are generated between all operating units, and accounting
transactions represent ownership transfer between all operating units in the chain.
Account Distribution for Dropship and Global Procurement:

The following flow of activities demonstrates this scenario for drop shipment and
global procurement:
A Simple Supplier
Receipt Receiving and then delivering or direct delivery. Only the receive transaction is
recorded. The deliver to inventory transaction goes to material transaction table and is
accounted as the PO Receipt transaction.
The following accounting entries are recorded:
ISP Receipt Qty x PO price
AAP Receipt Qty x PO Price
A Return to Vendor Transaction for the above receipt

Only the return to vendor transaction creates a row. The return to receiving transaction
will not have a row in this table.
The following accounting entries are recorded:

ISP Adjustment Qty x PO price
A Global Procurement Flow

Procuring Operating Unit (OU) is PRU and Receiving Operating Unit (OU) is Vision.
The owning organization in the transaction flow are both process organizations. The
procuring owner organization is PR1 and receiving owner organization is PL1.
There are two journals created, one for the procuring organization and another for the
receiving organization.
Entry 1: Against PR1 (Procuring OU = PRU) Logical Receiving in PR1
Clearing Account Receipt Qty x PO price
Entry 2: Against PL1 (Receiving OU = Vision)

If the intercompany entries are created using the PO Price, then the entries are as
follows (Receive in PL1):
ISP Receipt Qty x PO price
ICACC Receipt Qty x PO Price
If the intercompany entries are created using the Transfer Price, then the entries are as
follows:

ISP Receipt Qty x Transfer price
ICACC Receipt Qty x Transfer price
If the intercompany entries are created either Transfer Price or PO Price, then the
following entries are created:
Logical Receipt to Inventory in PR1
INV Receipt Qty x PO price
Clearing Receipt Qty x PO price
Logical Interorganization to Inventory in PR1
INV Receipt Qty x PO price
ICCOGS Receipt Qty x PO price
Physical Receipt in PL1
INV Receipt Qty x PO price or

Transfer Price
ISP Receipt Qty x PO price or

Transfer Price
A Retroactive Pricing Adjustment for the PO

Two transactions are created. One for adjusting the receive transaction and another to
adjust the already accounted delivery line.

The accounting entries for the adjustment to the receive line are as follows:
ISP Receipt Qty x Price

Adjustment
AAP Receipt Qty x Price

Adjustment
The accounting entries for the adjustment to the delivery line are as follows:
Retroactive Price Adjustment Receipt Qty x Price

Account (on Receiving Adjustment
Options for the Org)
ISP Receipt Qty x Price

Adjustment
Receipt and Delivery of an Expense Item

Both receipt and delivery lines are created as there is no impact to inventory from
receiving an expense item.
ISP Receipt Qty x PO Price
EXP Receipt Qty x PO Price
ISP Receipt Qty x PO Price

A
Navigator Paths
This topic provides the default navigation path for Accounting Setup and the cost
management profile options.
This appendix covers the following topics:
• Oracle Process Manufacturing Cost Management Navigator Paths
Oracle Process Manufacturing Cost Management Navigator Paths

Although your System Administrator may have customized your Navigator, typical
navigation paths are described in the following tables. In some cases, there is more than
one way to navigate to a window. These tables provide the most typical default path.
Window Path
Actual Cost Adjustments OPM Financials:Actual Costs:Adjustments
Actual Cost Adjustments OPM Financials:Reports: Standard:Run
Actual Cost Process OPM Financials:Actual Costs:Actual Cost

Process
Actual Cost Process OPM Financials:Actual Costs:View

Transactions
Actual Cost Transaction View OPM Financials:Cost Details:Actions:Actual

Cost Transaction View
Navigator Paths A-1

Window Path
Actual Cost Transaction View OPM Financials:Actual Costs:View

Transactions or Cost Management:Actual
Costs:Adjustments:Actions:Actual
Transactions View
Actual Costs Adjustment Codes OPM Financials:Setup:Actual Costs:Expense

Allocations: Adjustment Reasons
Allocation Codes OPM Financials:Setup:Actual Costs:Expense

Allocations:Codes
Allocation Definitions OPM Financials:Setup:Actual Costs:Expense

Allocations:Codes
Component Groups OPM Financials:Setup: Component Groups
Copy Item Costs OPM Financials:Copy Costs: Copy Items Cost
Copy Percentage Overheads OPM Financials:Setup:Copy Percentage

Overheads
Copy Resource Costs OPM Financials:Copy Costs: Copy Resource

Cost
Copy Overheads OPM Financials:Setup:Copy Overheads
Cost Allocation Maintenance OPM Financials:Actual Costs:

Expenses:Maintenance
Cost Allocation Processing OPM Financials OPM Financials:Actual Costs:

Expenses:Allocations:Special:Start
Cost Analysis Codes OPM Financials:Setup:Analysis Codes
Cost Overheads OPM Financials:Fixed Overhead
Cost Calendars OPM Financials:Setup: Calendars
Cost Component Classes OPM Financials:Setup: Component Classes
Cost Details OPM Financials:Item Costs
A-2 Oracle Process Manufacturing Cost Management User's Guide

Window Path
Costed Bill of Materials Report OPM Financials:Reports:Standard: Run
Cost Factors OPM Finacials:Setup:Cost Factors
Cost Method Codes OPM Financials:Setup:Cost Types
Cost Rollup Error Messages OPM Financials:Standard Costs:Cost

Rollup:Actions:View Error Messages
Cost Rollup Process OPM Financials:Standard Costs:Cost Rollup
Cost Rollup Process StatusOPM Financials OPM Financials:Standard Costs: Cost

Rollup:Actions:Process Status
Cost Inventory Organization Association OPM Financials:Reports: Standard:Run

Report
Costing Warehouse Associations OPM Financials:Setup:Cost Warehouses
Display Cost Burden OPM Financials:Item Costs:

Actions:Overheads Details
Expenses to Allocate OPM Financials:Setup:Actual Costs:Expense

Allocations: Expenses
Find Actual Cost Adjustments OPM Financials:Actual Costs:

Adjustments:Query:Find
Find Actual Cost Transaction View OPM Financials:Item Costs: Actions:Actual

Cost Transaction View:Query Find
Find Actual Cost Transactions OPM Financials:Actual Costs: View

Transactions:Query: Find or Cost
Management:Actual Costs:
Adjustments:Actions:Actual Transactions
View:Query:Find
Find Actual Costs Adjustment Codes OPM Financials:Setup:Actual Costs:Expense

Allocations: Adjustment Reasons:Query:Find
Find Allocation Codes OPM Financials:Setup:Actual Costs:Expense

Allocations:Codes: Query:Find
Navigator Paths A-3

Window Path
Find Allocation Definitions OPM Financials:Setup:Actual Costs:Expense

Allocations:Codes: Query:Find
Find Overhead Details OPM Financials:Overhead Details: Query:Find
Find Component Groups OPM Financials:Setup: Component

Groups:Query:Find
Find Cost Allocation Maintenance OPM Financials:Actual Costs:

Expenses:Maintenance:Query:Find
Find Cost Analysis Codes OPM Financials:Setup:Analysis

Codes:Query:Find
Find Cost Calendars OPM Financials:Setup: Calendars:Query:Find
Find Cost Component Classes OPM Financials:Setup: Component

Classes:Query:Find
Find Cost Details OPM Financials:Item Costs: Query:Find
Find Cost Method Codes OPM Financials:Setup:Cost Method

Codes:Query:Find
Find Costing Warehouse Associations OPM Financials:Setup:Cost

Warehouses:Query:Find
Find Expenses to Allocate OPM Financials:Setup:Actual Costs:Expense

Allocations: Expenses:Query:Find
Find Invoice Lines OPM Financials:Actual Costs: AP Invoice

Prices:Query:Find
Find Material Cost Component Class OPM Financials:Setup:Actual Costs:Matl Cost

Components: Query:Find
Find Resource Costs OPM Financials:Resource Costs: Query:Find
Find Rollup Source Warehouses OPM Financials:Setup:Standard Costs:Source

Organization:Query: Find

Window Path
Formula Details OPM Financials:Item Costs: Actions:Formula

Details
GL Expense Allocation Definition OPM Financials:Reports: Standard:Run
GL Expense Allocation Detail Report OPM Financials:Reports: Standard:Run
GL Item Cost Detail Report OPM Financials:Reports: Standard:Run
Invoice Price Maintenance OPM Financials:Actual Costs: AP Invoice

Prices
Item Cost Detail Report OPM Financials:Reports: Standard:Run
Item Cost Selection OPM Financials:Cost Details: Special:Item

Cost List
Lot Cost Items OPM Financials:Setup:Lot Costs:Lot Cost

Items
Lot Cost Burdens OPM Financials:Setup:Lot Costs:Overheads
Lot Cost Details OPM Financials:Lot Cost:Lot Cost Details
Lot Cost Process OPM Financials:Lot Cost:Setup:Lot Cost

Process
Lot Cost Adjustment OPM Financials:Setup:Lot Costs:Lot Cost

Adjustment
Lot Cost History Report OPM Financials:Reports: Standard:Run
Cost Management:Lot Cost:Reports:Lot Cost

History
Item Lot Cost Detail Report OPM Financials:Reports: Standard:Run
Material Cost Component Class OPM Financials:Setup:Actual Costs:Matl Cost

Components
Percentage Burden Codes OPM Financials:Setup:Percentage

Overheads:Codes
Navigator Paths A-5

Window Path
Burden Priorities OPM Financials:Setup:Percentage

Overheads:Priorities
Burden Percentage OPM Financials:Setup:Percentage

Overheads:Percentages
Source and Target Percentage Burden OPM Financials:Setup:Percentage

Components Overheads:Associations
Resource Cost Selection OPM Financials:Resource

Costs:Actions:Resource Cost List
Resource Costs OPM Financials:Resource Costs
Rollup Source Warehouses OPM Financials:Setup:Standard Costs:Source

Warehouses
Routing Details OPM Financials:Cost Details:Actions:Routing

Details
Start Actual Cost Process OPM Financials:Actual Costs: Actual Cost

Process:Actions:Start
Start Cost Rollup OPM Financials:Standard Costs: Cost

Rollup:SpeActionscial:Start
View Error Messages (Actual Cost Process) OPM Financials:Actual Costs: Actual Cost
Process:Actions:View Error Messages

Glossary
Actual Costing
The method by which OPM uses the actual cost of production components (resources,
raw material purchase prices, and so on) to calculate the cost of production.
Analysis Codes
Categories by which different costs for the same item (such as value-added or standard
costs) or a class of items, may be stored and reported.
Burden
A cost added to production to cover overhead expenses (such as facility rental).
Closed Calendar Period

A period in the current cost calendar which is locked against any further postings, or
changes to existing postings.
Component Classes
Classifications by which production resources may be grouped for reporting.
Component Groups
Groupings by which resource or material costs (for example, raw materials and
production machinery) may be collected for reporting.
Cost Calendar
A calendar comprised of the periods to which costing transactions will post.
Cost Methods
The methods by which OPM will calculate the costs of production (for example, actual
costs of production). Cost Rollup
A procedure in which changes in product component costs (resource, material) are
incorporated into the product's total cost.
Glossary-1
Cost Update
The process by which all component costs are updated to the proper general ledger
accounts.
Frozen Cost Period

A period in the current cost calendar in which no cost rollups and/or cost updates can
be made to existing cost pistons. Newly-created cost postings may be entered, rolled up,
and updated.
General Ledger Expense Allocations

Third-party general ledger accrual expenses that may be allocated to designated items
for addition to production component costs.
Nominal Cost
The cost of using a resource to produce a single production unit.
Open Costing Period

A period in the current cost calendar to which daily cost transactions can post.
Routing Costs
The costs of resources used in operations and activities in a particular production
routing.
Standard Costing
The method of defining the static cost of items, formulas, formula ingredients, and
resources used during production.
Glossary-2

Index
Standard cost, 3-15

A Class component classes
manipulation, 2-34
Accounts payables, 2-25
Close
Actual cost
Inventory calendar period, 8-8, 8-9
adjustments, 4-38
Closed periods, 2-34
adjustments form, 4-26
Component classes, 3-18, 4-22, 4-22, 4-36
calculate, 8-9
Component groups
period-end processing, 8-8
defining, 2-34
processing, 4-28
Copying
viewing, 4-31
costs, 7-1
Actual cost adjustments report, 9-4
resource costs, 7-5
Actual costing, 1-6, 2-25
Cost
transactions, 2-25
Actual, 1-6, 2-25
Add/Modify
adjustments, 2-25
General Ledger costing data, 8-5
defining, 1-3
Adjustment reason codes
development area, 1-1
defining, 4-26
monitoring and simulation, 1-9
Adjustments
product, 4-12
Actual cost, 4-38
running final update, 8-8, 8-10
Allocation basis
Standard, 1-5, 2-24
defining, 4-22
type, 2-29
Allocation codes
update, 8-1
defining, 4-22
viewing overheads, 4-36
Cost analysis code
B
defining, 2-37
Batch Yield Variance report, 9-8 Cost calendar, 3-10, 3-15, 4-3, 4-6, 4-27, 4-38, 8-5
Burden cost details, 8-9 defining, 2-31
Burden costs, 2-25 Cost component classes
defining, 2-34
C Cost Factors
Calculating defining, 2-46
Actual costs, 4-12, 8-9 Costing inventory organization associations
Index-1
defining, 2-38 Expense allocation accounts
Cost Management defining, 4-24
navigator path, A-1 Expense allocations, 8-9
Cost method code, 5-19, 7-5 General Ledger, 2-25
Cost organization Association report, 9-5
Cost rollup F
running, 8-7
Final cost update, 2-33
Cost type code, 4-31
Fixed Overheads, 2-50
Usage, 2-29
Formula Cost
Cost type code usage
Viewing, 3-20
for standard cost only, 2-29
Frozen periods, 2-33
Cost type definition, 2-24
Cost Types, 2-29
G
Cost Update form, 8-3
General Ledger
D accrued cost allocation, 4-22
add/modify costing data, 8-5
Data
expense allocations, 4-22
Standard cost, 2-24
Fiscal policy, 2-42, 2-44, 7-9, 8-1
defining
running preliminary update, 8-7, 8-10
component groups, 2-34
GL Expense Allocation Definition report, 9-4
Cost analysis code, 2-37
GL Expense Allocation Detail report, 9-5
Cost calendars, 2-31
GL Item Cost Detail report, 9-6
Costing inventory organization associations,
GMF
2-38
Actual Costing Maximum Iteration Limit for
fixed overheads, 2-51
Circular Reference, 2-4
Fixed Overheads, 2-50
Actual Cost Process Error Limit, 2-4
Resource costs, 2-47, 2-49
Copy Item Costs - Copy Recipe Information to
Defining
Target, 2-4
Adjustment reason codes, 4-26
Costing Tolerance Percent, 2-4
Allocation basis, 4-22
Delete Ingredient Cost When No Effectivity
Allocation codes, 4-22
Found, 2-4
Allocation definitions, 4-22, 4-25
Exclude Invoices Which Have No Receipts, 2-4
Cost component classes, 2-34
Exclude Negative Inventory Balance, 2-4
Cost Types, 2-24, 2-29
Include Invoices in Actual Cost, 2-4
Expense allocation accounts, 4-24
Log All Subledger Variances, 2-4
Rollup source inventory organizations, 3-13
Standard Cost Rollup Error Limit, 2-4
Rollup source organizations, 3-13
Subledger Variance Type, 2-4
standard item costs, 3-10
Use Only Cost Effectivities for Cost Rollup, 2-
Defining costs, 1-3
4
by Cost Calendar Periods, 1-3
by inventory organization, 1-3
I
by Item, 1-3
by multiple Cost Types, 1-3 indirect component processing
Defining Lot Cost Overheads, 5-6 Standard costing, 2-37
Inventory calendar
E close period, 8-8, 8-9
Index-2
Inventory transactions Oracle Inventory application, 2-2
valuing, 1-8 overhead costs
Inventory Valuation report, 9-7 prerequisites, 2-50
Item cost Overhead costs, 3-10, 4-6, 4-36
list, 4-34 Overhead details
viewing, 3-21 viewing, 3-18
Item Cost Detail report, 9-1
Item Costs form, 3-10 P
prerequisites, 3-10
Period Moving Average Cost, 2-27, 4-3, 4-12
periods
L closed, 2-34
Last Transaction, 4-3 frozen, 2-33
Last transaction cost, 4-3 never opened, 2-33
Lot Cost Adjustments open, 2-33
Using, 5-10 Period Weighted Average Cost, 2-27, 4-12
Lot Costing Perpetual Average Cost, 2-27
Examples, 5-11 Perpetual Weighted Average Cost, 4-3
Setup, 5-5 PMAC, 2-27, 4-3, 4-12
Understanding, 5-4 PPAC, 2-27, 4-3
Viewing, 5-8 Process cost allocations
Lot Cost Overheads from GL update, 4-27
Defining, 5-6 Processing
Lot Cost Process Actual cost, 4-28
Running, 5-7 Product calculation type, 2-30
LSST, 4-3 Product cost, 4-12
Production batch, 2-25, 4-31
M costs, 4-12
Production batch costs, 8-9
Mapping costs
Purchase order receipts, 2-25, 4-31
based on Analysis code, 1-3
PWAC, 2-27, 4-12
based on Cost Component, 1-3
Material component classes/analysis codes, 4-25
Material Usage and Substitution Variance report, R
9-8 Raw material calculation type, 2-30
Monitoring and simulating costs, 1-9 Raw material costs, 8-9
Report
N Accounting Unit Mapping, 9-12
Account Mapping, 9-13
navigator path
Actual cost adjustments, 9-4
Cost Management, A-1
Cost organization Association, 9-5
never opened, 2-33
Detailed Subledger, 9-10
GL Expense Allocation Definition, 9-4
O
GL Expense Allocation Detail, 9-5
Open periods, 2-33 GL Item Cost Detail, 9-6
OPM cost development area, 1-1 Inventory Valuation, 9-7
OPM Lot Cost Detail Report, 9-8 Item Cost Detail, 9-1
Oracle Inventory, prerequisites, 2-2 Material Usage and Substitution Variance, 9-8
Index-3
OPM Lot Cost Detail, 9-8 Cost overheads, 3-18
OPM Lot Cost History, 9-9 Formula costs, 3-19, 3-20
Resource cost Item cost list, 4-34
copying, 7-5 Item costs, 3-21
defining, 2-47 Overhead details, 3-18
list, 2-49 Routing costs, 3-19, 4-37
selection, 2-49 Standard cost, 3-18
Rollup source organizations, 3-13 Viewing Lot Costs, 5-8
Routing cost
prerequisites, 4-37
viewing, 3-19, 4-37
Running
Cost rollup, 8-7
final cost update, 8-8, 8-10
preliminary update, 8-7, 8-10
Running the Lot Cost Process, 5-7
S
Setting Up Lot Cost Items, 5-5
Standard cost
period-end processing, 8-6
viewing, 3-18
Standard cost data, 2-24
Standard costing, 1-5, 2-24
indirect component processing, 2-37
Standard cost overhead, 4-6
Standard cost rollups, 2-25
Standard item costs
defining, 3-10
T
Transactions
Actual costing, 2-25
U
Update cost, 8-1, 8-3
Usage
Cost type code, 2-29
Using, 4-25
V
Valuing Inventory and Resource transactions, 1-8
Viewing
Actual cost transactions, 4-31
Cost overhead, 4-36
Index-4

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Oracle® Process Manufacturing

Cost Management User's Guide

Part No. E49061-02

Primary Author: Ankit Jaiswal

Contributing Author: Reena Titus

Send Us Your Comments

3 Using Standard Costing

4 Using Actual Costing

5 Using Lot Costing

6 OPM - Landed Cost Management Integration

8 Period-End Cost Processing

9 Cost Management Reports

11 Accounting Processes and Distributions

Oracle Process Manufacturing Cost Management User's Guide, Release 12.2

Access to Oracle Support

Related Information Sources

• Oracle Electronic Technical Reference Manual - The Oracle Electronic Technical

Do Not Use Database Tools to Modify Oracle E-Business Suite Data

This topic provides an overview of Oracle Process Manufacturing (OPM) Cost

OPM Cost Development Area

• Valuing material and resource transactions in

• Create journals in OPM Subledger using Oracle Subledger Accounting

• Monitor and simulate costs using reports and inquiries

Note: Item and inventory transaction information are maintained in

Cost Management Process Flow

• Use standard, actual, or lot cost calculation methods to develop costs.

• After reviewing and finalizing costs, perform period-end processing (month-end

The graphic describes the Cost Management process as explained below:

1-2 Oracle Process Manufacturing Cost Management User's Guide

• Cost Component Class

Cost Calendar and Period

Multiple Cost Types (previously referred to as Cost Methods)

1-4 Oracle Process Manufacturing Cost Management User's Guide

Establishing Standard Costing

• Run the Cost Rollup process

The cost of a product is based on:

• Batch ingredient consumption and resource usage

• Opening inventory balances

• General Ledger Expense allocations for indirect overheads

• All material transactions including internal order receipts

Establishing Lot Costing

1-6 Oracle Process Manufacturing Cost Management User's Guide

• Lot Cost types (costs are not recalculated)

• Purchase price variance

Account Debit Credit

Receiving Inspection 300$

Accrued Accounts Payable 300$

Account Debit Credit

Retroactive Price 300$

Receiving Inspection 300$

Account Debit Credit

Valuing Inventory and Resource Transactions

Revaluing Inventory Cost

Valuing Inventory in Production

1-8 Oracle Process Manufacturing Cost Management User's Guide

Valuing the Material Purchased

Generating Cost of Sales

Monitoring and Simulating Costs

• Lot Cost History report